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1 Conventional wisdom holds that the public sector generally does not face the threat of new competitors entering the market; however, over the long term, that thinking may prove false. With changes in technology and the advent of the sharing economy, state departments of transportation (DOTs) will need to deliver services and products differently, or they may see their role reconfigured, diminished, or perhaps become irrelevant in the long term. For example, some transit agencies already see Uber and Lyft offering cost-effective mobility alternatives. Most DOTs face the challenge of falling revenue combined with a growing need for services and legacy infrastructure that is expensive to maintain and may not be located where people most need it. As traditional means of funding and delivering services become inadequate, innovation is an essential part of an overall strategy for success. Well-executed innovations provide: â¢ More efficient and effective delivery of services (not always cheaper), â¢ Better customer satisfaction through improved responsiveness, â¢ Improved organizational morale by building a more inclusive and inspired work- force, and â¢ A better ability to recruit talented new employees in a more competitive recruiting environment. Most state DOTs have made some effort to spur innovation, often by setting up their own State Transportation Innovation Council (STIC), which is a model for innovation that emerged from FHWAâs Every Day Counts initiative. But innovation advocates quickly realized that to encourage employees at all levels and locations to turn good ideas into reality, they needed to create and sustain a multi-faceted innovation-friendly culture that touches everyone in an agency and aligns work habits with shared values, processes, and institutional support. This type of cultural transformation can be challenging, particularly in the public sector, where profits are not the fuel for innovation and a âweâve-always-done it-this- wayâ mentality can put the brakes on change. Initial bursts of energy, enthusiasm, and interest around new ideas can perish if an agency lacks the understanding of how to encourage cultural change over the long haul. This guide is designed to increase understanding of innovation cultures and provides practical strategies and examples of successful innovation cultures at work. Innovation or Irrelevancy? INNOVATION happens when people are empowered to move beyond the boundaries of conventional thinking, topple the status quo, and âconnect the dotsâ in new ways that result in products or services that are more responsive to the communities they serve. Innovation has tremendous power to unlock human potential and organizational effectiveness. If a DOT can find ways to get things done faster, cheaper, or better, then employees will be more encouraged to achieve their mission, and time and money can be freed up for other needs. These kinds of positive results increase stakeholder trust and help an agency gain the political capital it needs to secure funding and support for mission-critical activities.