Social security organizations aim to provide much-needed benefits to the right people, with the right amount, on time, through quality cost-effective services, at minimal risk. This is best achieved by stability, precise management, and avoiding uncertainty. As such, innovation can push social security institutions out of their comfort zone. However, in today's turbulent times characterized by volatility, uncertainty, complexity, and ambiguity (VUCA) (Bennet and Lemoine, 2014), the absence of change and transformation capacity poses critical risks for social security organizations. Therefore, innovation and risk cannot simply be wished away. The challenge lies in striking the right balance between necessary transformation and risk.

This analysis focuses on the role of leadership in innovation and the motivations and scope of innovations in social security. It builds on discussions with heads of innovation, research, planning, business development, or organizational transformation in CEO Roundtables and webinars organized by the International Social Security Assocation (ISSA) since 2021 (see box at the end of the article).

A first analysis on innovation through collaboration in social security was published in February 2023 (ISSA, 2023), linked to the ISSA Collaborative Innovation Hub. Further articles will follow to look at the organizational preparedness and cultural factors involved in encouraging and sustaining innovation.

Origins, nature, and impulse for innovation

Motivation for innovation and the role of leadership

Leadership plays an essential catalytical role in driving innovation (Keeley et al 2013) and the head of management should motivate and inspire for continuous innovation (ISSA 2019). In successful cases of innovation, top management manifests a vision and sets the level of ambition for change. In this, it must balance boldness with pragmatism. Leadership declares to stakeholders the organization’s intent and drive for innovation, and gives its direction. In addition it inspires them, helps overcome organizational inertia (including from siloed functional workstreams) and sustains momentum during transformation (Kegan and Lahey, 2009). Leadership sponsors change, and creates the conditions for employees to take acceptable risks. This is done by conferring legitimacy and psychological safety so they may invest time and organizational resources in innovation, and by celebrating and rewarding their efforts. It spurs creativity by delegating authority and responsibility over innovation initiatives to business managers. Leadership ensures policy and organizational alignment, along with discipline by holding innovation owners accountable for their results (Ross, Beath and Moker, 2019). It also provides the resources and ensures the cost-effectiveness of investments in innovation. Finally, effective downward and upward communication flows allow for prompt problem solving (for example, limitations in the legal framework, fragmented government policies, and scarce resources) (ISSA, 2021).

Leadership from the governmental level

In many countries, the motivation and support for innovation in social security comes from central government departments or parent ministries. The innovations are then implemented in collaboration with social security organizations.

The Hungarian health system is organized around a single health insurance fund providing health coverage for nearly all residents. Hospital waiting lists are handled by health care providers under the supervision of the National Health Insurance Fund Management. Concerns from its parent Ministry with excessive delays in health care provision prompted the development of an online registry called the National Institutional Waitlist Registry (SOR_REND system). The system connects healthcare providers, monitors the availability of specialized care in real time, and directs patients to available care providers. Every patient can track the waiting lists and appointment lists in the register online. This had a profound impact on reducing waiting lists since 2012.

The National Social Security Institute (Instituto Nacional do Seguro Social – INSS) in Brazil is the agency responsible for paying benefits for retirement, death, illness, disability, and other benefits under the social security law. It underwent groundbreaking innovation in its user interface since 2019. Innovation was accelerated by an interdepartmental modernization initiated by the Secretariat of State for Digitalization and Administrative Modernization (Sikkut, 2022). Since 2019, the transformation of social security became a political priority because the surge in demand for services associated with relative staff shortages had resulted in excessively low service turnaround (ISSA, 2020). In this process, the board of INSS and its senior management team took a more active role in the prioritization of investments for modernization. The top-level engagement contributed to greater consistency and sustainability of INSS modernization efforts, as presented in a webinar on institutional experiences and the ISSA Collaborative Innovation Hub in April 2023.

The Estonian Social Insurance Board (ENSIB), a government institution acting under the supervision of the Ministry of Social Affairs, administers and implements social security and welfare legislation. Estonia is a highly digitalized country where the government adopts a centralized approach to digital innovation. The project “Proactive service provision for disabled people” was implemented in 2020. The automation of the process of applying for disability aimed to reduce staff costs (as application review was a time-consuming process for medical doctors). In this process, ENSIB benefited from governmental efforts under the Government office and the Ministry of Social Affairs Innovation department. In addition, stakeholders in the process of digital transformation highlighted the role of the project manager in specific innovations, as a success factor, contributing with leadership skills to collaborative innovation (Nõmmik and Lember, 2021).

Leadership in social security organizations

In some cases, innovation is inspired and forged by leaders in social security organizations, who build systemic capabilities for innovation.

The Rwanda Social Security Board (RSSB) is a government agency that manages six social security schemes, namely pensions, occupational hazards, medical scheme, maternity leave benefits, community health insurance, and a long-term saving scheme. The creation of the latter scheme for the informal economy workers originated in the Ministry of Finance and was implemented by RSSB. As demonstrated in a webinar to introduce the ISSA Collaborative Innovation Hub in February 2023, its top leadership has formed a strong vision for the ongoing transformation of RSSB to a member-first, data-driven oranization by 2025. To make this happen, it is revamping its governance and organizational structure with board and senior management officials aligned with its innovation strategies (Cf. ISSA, 2019). It also seeks to have additional management authority over procurement and human resources.

The Social Security Organisation (Pertubuhan Keselamatan Sosial – PERKESO) in Malaysia is a statutory agency under the Ministry of Human Resources in Malaysia. It provides benefits to private sector employees in case of workplace injuries, emergencies, occupational sickness, and death. The business representatives in the governing body pushed for the fund to modernize its service offer to continue to be relevant to its users. This prompted the overhaul of PERKESO's infrastructure and capabilities for innovation (Yapp, 2021). PERKESO already had some managerial autonomy such as the ability to determine its remuneration systems. This greatly facilitated the recruitment of talent to fill the needs of its modernization strategy, as presented in the ISSA webinar in February 2023.

The Colombian Family Allowances Fund (Caja Colombiana de Subsidio Familiar – COLSUBSIDIO) has been recognized as one of the most innovative organizations in the country. It provides family allowances and complementary benefits in cash and in-kind to families from health services to housing, education, culture, and sports. In 2015,  its leadership pushed for the organization to establish a structured innovation system through investments in people, processes, and infrastructure. It established the Innovation Center to promote an innovation culture and equipped it with dedicated resources. COLSUBSIDIO understands that there are different types of innovation and that many types of leadership are needed for innovation. One of the main tasks of its innovation centre is to push leaders to spend more time on future-oriented activities. It uses a Horizon Framework for innovation which is described next. COLSUBSIDIO presented this case in the webinar in April 2023.  

Definition and types of innovation

The potential for innovation in social security hinges on the comprehensiveness of contingencies covered, the breadth of its covered population, the diversity and appropriateness of its channels of service delivery, and the complexity of its organization and operations systems. Keeley et al (2013) defined ten types of innovation in three main domains (see also Deloitte, 2023). These refer to configuration (the operating model or business system), offerings (core product or services), and experience (customer-facing elements).

Figure 1. Types and domains of innovation.

Configuration

Offering

Experience

Source: Adapted from Keeley et al (2013).

Whilst innovation tends to be often associated with the product offer and performance, most transformational innovation initiatives are associated with a combination of the above areas of innovation. The following are applications of different types of innovation:

Table 1. Examples of the use of types of innovation

	Configuration	Offering	Experience
RSSB – Rwanda IMIsanzu platform on contributions		Service	Channel Customer engagement
PERKESO – Malaysia Emergency services no_claim accident compensation	Network Process	Product system	Channel Customer engagement
ENSIB – Estonia Automation of disability application	Network Process	Product system	Channel Customer engagement
Source: ISSA.

In January 2023, RSSB of Rwanda launched IMIsanzu, a digital platform that displays the contributions that users have paid. This is critical for workers in the informal economy to encourage them to continue contributing, both to their pension and to their health funds, as their contributions tend to be disjointed. They can resume their payment knowing what they are accumulating and counting towards their benefits. The design of this service involved the participation of associations of the informal economy and non-governmental organizations (NGOs).

In Malaysia, PERKESO connected its systems to health practitioners so that in the event of an accident, the patient does not have to produce the claim. Their eligibility for injury and rehabilitation benefits can be verified by having medical staff entering the national identification card of the victims of accidents in case of emergencies. This involved connecting and partnering with different actors in the field of emergency services.

In Estonia, ENSIB developed the “Proactive service provision for disabled people” project  described before. The Estonian Chamber of Disabled People helped conduct interviews with the target group.

Another related delimitation in innovation is whether it comprises efficiency-enhancing improvements only (Horizon 1 core initiatives), which relate mostly to product performance and operational processes, scaling up of tested measures (Horizon 2 adjacent initiatives in products or services systems), or exploration activities (Horizon 3 transformational measures involving other elements of configuration and user experience). The next graph illustrates the three horizons.

Figure 2. Innovation Ambition matrix.

Source: Nagji and Tuff (2012).

In Colombia, COLSUBSIDIO adopted a simple but broad definition of innovation that embraces the diversity of its portfolio of activities and support areas. Accordingly, innovations must be aligned with its business strategy and must demonstrate impact and added value to users (for example more coverage or strengthened service offer). In accordance with the innovation model above, the social security organization distinguishes innovations that bring;

• incremental changes to core operations and improve efficiency in the production and delivery of existing products and services;
• marginal improvements in products and services to offer better protection and improve the quality of user experience, and;
• transformational innovations that have the potential to affect the entire value creation and related business model of the organization.

At INSS in Brazil, innovation started with customer-facing digital solutions and tends to be associated with the automatization of business processes (ISSA, 2020). New services are now designed and released with a digital-first approach. In Malaysia, PERKESO has taken a different approach. Having achieved recently significant milestones in migrating its core operations management to open modular enterprise management systems, it now defines innovation as the search for practical solutions to problems felt by users and producing concrete changes. Innovative solutions need to be scalable and cost-effective. Innovative solutions should not be restricted to digital products and must contribute to humanizing relations between social security and social actors.

At RSSB in Rwanda, transformation is seen from a holistic perspective, encompassing core processes and service transformations as well as governance and managerial aspects.

In France, the Union of National Social Security Funds (Union des caisses nationales de sécurité sociale – UCANSS), the federal structure serving all branches of social security, has set up an innovation lab that focuses on internal business transformation processes. In turn, innovation centres from social security branches focus on specific product and service developments.

Although the scope of innovation also hinges on the level of development and maturity of social security in each country (Horizon 1 activities would predominate in new social security systems), the reality is that all types of initiatives tend to overlap, with innovations in new products and services offerings being tried and tested at the same time as core systems are improved. The advent of new cloud-based systems affecting core enterprise management, and the migration to digital and mobile-first services continue to require core systems innovations even in mature social security organizations. The governance and managerial innovations involved in transformational changes seen at RSSB, tend to be less visible and are more complex to achieve in social security organizations because they challenge the natural organizational inertia involving vertical command and control systems of authority and risk aversion (Magnusson et al, 2021).

Nature of Innovation and leadership types

The scope and meaning of innovation in social security varies depending on the context and specific circumstances of each organization. For each type of innovation, different forms of leadership are needed. The table below presents different horizons of innovation and the corresponding leadership attributes needed to undertake them.

Table 2. Forms of Leadership by Horizons

	Horizon 1	Horizon 2	Horizon 3
Time frame	One to two years	Two to four years	Five years and more
Users	Current users	Identified non-users	Unknown users
Products, Services, or Processes	Existent	Emerging solutions	Radically new
Nature of innovations	Improvements	Scaling up	Exploration
Focus of activities	Protect and scale core business areas Focus on execution and operational excellence Repeatable institutionalized processes	Focus on new business models with new solutions and extensions of products and business areas	Create new business concepts that can be converted into growth initiatives (in Horizon 2)
Leader designation	Operators	Business builders	Visionaries
Leader attributes	Discipline Consistency Reliability	Bias for acting on ideas Urgency to grow and extend new solutions to new users Hedging of risks	Confidence to question one's level of awareness and knowledge Tolerance for ambiguity Acceptance of risk
Talents or skills	Process discipline Current technical knowledge	Pursue opportunities to build new business Skills in partnering with different functional roles Scaling and structuring organizations	Uses insights and serendipity for discovery Empathy with users Multidisciplinary work Critical thinking
Source: Adapted from Wharton Business School (2023).

An example of Horizon 1 innovation leadership (incremental improvements in the core) is the digital data-driven automation systems that improve core services' security and performance and generate savings (ISSA,  2022). The State Social Insurance Fund Board of the Republic of Lithuania (SSIFB) provides an example of a Horizon 2 type of innovation leadership. To automatize tasks at scale, the SSIFB underwent a programme to upskill its back office. The programme targeted staff who had been working for 15 years as claim and processing specialists. Leadership had to convince the specialists to acquire new skills as beta users (testing specialists for new implementations). The staff had to learn SQL and basic testing skills. It involved convincing them about the individual and organizational benefits of digitization and overcoming their resistance and fear. An innovation in Horizon 3 would be the investment in the whole digital stack from connected hardware to new digital platforms, enabling data sharing. One example of this is the German Federal Pension Insurance (Deutsche Rentenversicherung Bund – DRV Bund). It initiated such a project in 2020, which it will develop in the next ten years. This will require leaders to make the case for investments based on future cost reductions and valuing digital data social security as a central value for the government decision-making ecosystem.

Organizations and their senior management tend to focus on Horizons 1 and 2 (scaling up proven solutions). To achieve more transformational change, social security leadership should spend considerably more time and effort preparing their organizations for the future (Magnusson et al, 2021). To help this process, COLSUBSIDIO defines individual performance metrics tied to innovation. These include for example a minimal number of initiatives to develop each year, the number of workers that participate in initiatives and processes of innovation each year, and objectives for staff training. In addition, innovation performance is enhanced by social factors such as the reputation (or brand) of COLSUBSIDIO as an innovative company. The staff is recognized through innovation awards and praise for their contributions to innovative practices. All these are factors offer motivation and encouragement for the staff to co-create and follow through with innovation.

Final remarks

Innovation in social security goes beyond efforts to drive efficiency in core operations. In many cases, such efforts to achieve operational excellence are combined with other types of innovation that more radically transform the way social security delivers services and works for users.

ISSA members have been developing different types of innovation approaches and leadership styles and models. All confirm the centrality of leadership for initiating and sustaining innovative projects.

The challenge for leadership is to combine sponsoring creativity, which is associated with divergence, ambiguity, and risks, with achieving operational excellence, which is associated with discipline and execution risk minimization (Magnusson et al, 2021). In other words, decision-making must be increasingly precise and rigorous using data-driven tools, processes, and analytics, and simultaneously use critical thinking and design thinking methods to address more complex problems and uncertainty (ISSA, 2022). For that, innovation needs to be fostered by a set of well-integrated organizational capabilities.

References