Purpose The purpose of this paper is to provide explicit thinking about the organizational elements that support or hinder innovation in the government sector as it increasingly faces demand for innovative solutions to policy areas. The paper aims to present the development and findings of an evaluative case method conducted for an Australian state government department's organizational innovation program. Design/methodology/approach The evaluative case study was developed and conducted in two phases. First, an intellectual capital conceptual framework was applied to four independently sourced and discreet case organizations to represent multiple exemplars of innovation capacity building. These exemplars were suspended from their context in order to identify essential elements of the innovation capacity development process which in turn were then applied in phase two to the Department of Treasury and Finance (DTF), a Victorian (Australia) public policy organization. Findings The case raises critical distinctions between “innovation capability” and “innovation capacity”. The discussion offers insight into the process of developing innovation capacity for government policy organizations. Research limitations/implications The evaluation method incorporated a novel technique and trialed a phase development instrument for testing the embeddedness of organizational innovation. Both the technique and the instrument would benefit from further refinement, testing and development. Originality/value This paper develops work previously presented in O'Connor and Roos that considered the conceptual framework for using intellectual capital as an evaluation framework for organizational innovative capacity. It extends this work by piloting its application in a specific context and offers new insight into the organizational design issues of government organizations facing the challenge of producing innovative policy solutions.
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