Here is an example that shows (even!) governments can use outside-in innovation. In this case study, cross-agency teams worked together to design ideal service-delivery workflows.  Could this approach be used in your organization?

PROBLEM: Frustrating User Experience

The Information Technology needs of the agencies within the state’s Health and Human Services organization were being addressed in a bureaucratic and fragmented fashion, which led to over-spending and under-serving residents.

APPROACH: Start from the End-User's Point of View

Step back and look at the needs of all the agencies from the outside in—from the perspective of the citizens and families being served. Design an approach to IT architecture and infrastructure that would be more end-customer driven, meet government compliance needs, and reduce duplication of effort.

End-Customers:

Residents, including low income families/special needs families

Key Scenarios:

Provide healthcare services under Medicare and Medicaid; Provide care for people with mental retardation and respite services for caregivers; Provide income and services for families of children living in poverty; provide foster care for at risk children; Track the onset of contagious diseases.

Techniques Used:

• Led by a Core Cross-agency Team + an Extended Cross-Agency Team
• Group Interviews/Issues & Vision Sessions with multiple stakeholders in each agency and across agencies with Issues mapped out graphically for all to see
• Two 5-day workshops with external constituents to co-design ideal end-customer scenarios, develop a common object and activity model, and develop prototypes for end-customer facing tools—6 months apart

 Key Factors that Contributed to the Success of the Engagement:

• Participation of very senior government executives: Comptroller, Secretary of State, Assistant Deputy of Health and Human Services
• Participation of non-government IT-savvy citizens and businesspeople
• Building a shared vision of the ideal service delivery platform, rather than dwelling on how things were done today 
• Development of a high-level people/process/technology implementation plan
• Rapid modeling and prototyping

 Insights Gained:

• Everyone realized that most of the current business processes and IT solutions were designed to pay providers for services rendered, but not to ensure that end-customers’ outcomes were being achieved.
• There are many important subtleties in how certain terms are defined, “e.g. family” that vary from agency to agency, but no explicit business rules to support important distinctions.
• There were few self-service tools available to citizens and residents, or to the businesses that provide services to the state agencies.

 Results:

• It became apparent that the Commonwealth of Massachusetts needed to have digital signatures to enable online transactions and self-service. The Secretary of State proposed that legislation and it was passed in the next session.
• The IT organization shifted its definition of end-user for application development, focusing on the citizens/residents, not just the state employees, in the design of applications and tools.
• The IT organization shifted to a rapid iterative design and prototyping environment, co-locating side-by-side teams of business analysts and developers within the agencies.
• The first online portal applications went online within the next 6 months. Louis
  Gutierrez led the charge to develop the cross-agency customer self-service portal.