I'm in Malaysia presently speaking at a banking conference (civil service watchers - I've taken annual leave to do so).
A question I've just gotten is "what is necessary to make a bank go after radical innovation"? My answer was "you need to be staring death in the face".
This is true for most organizations, I think. Truly business radical, game changing innovations that affect core business almost never comes from large organisations who can sit happy on their current operations.
"But", I hear you ask, "what about Apple? What about Google. What about.. what about..?".
Notice that I said game-changing innovation that affect core business. Apple, with iPhone went after a new segment. Google, with Docs and so forth, are going after a new segment. They're not doing anything that disrupts where they got their money previously.
Banks, and to a lesser degree, the public sector are different. Bankers don't have any new segments they can go after. They go after incremental innovations that let them do more of the same, certainly, but you either are a banking customer or you're not. And for public sector, you are a customer, whether you want to be or not.
In both cases, there is no reason to change anything unless you're facing a crisis of titanic proportions and your back is against the wall. You have to innovate because there are no other options available. If you fail to pull something out of the bag, its game-over.
Banking had it's crisis, but conveniently got a bit of a boost from the public sector. This meant it dodged the "do or die" transformation it might otherwise have been faced with. Whether that was the right thing or not, I won't comment on. But let's face facts. There will likely be no radical transformation of the banking service offer, because profits are returning and "going back to basics" is a perfectly reasonable strategy in this scenario.
The same cannot be said of the public sector though, which has its back to the wall substantially. We will not be able to do the things we've done in the past the way we've done them, because the money to do so doesn't exist. Ergo, we are forced into new ways of doing things, whether the entrenched hierarchy likes it or not.
Here is the conclusion I draw from all this. If you want to be an innovator, and you want to make a real difference, you can only go to organizations in crisis. They are the ones that are forced into changes rather than choosing to adopt changes. No-one chooses to change without a good reason.