Resource context
This resource is the OECD report “Enhancing Innovation Capacity in City Government”, published by OECD Publishing. The report is authored by Oscar Huerta Melchor, Natalia Altman, Laura Valdés, Vu Tran, and Sam Whittlesey, and was produced in collaboration with Bloomberg Philanthropies. It draws on an OECD/Bloomberg survey of 89 cities worldwide (from under 50,000 residents to over 9 million) and a literature review to explain how city administrations build the capability to innovate.
Why innovation matters for cities
The report frames innovation capacity as a practical requirement for cities facing intersecting demographic, economic, environmental, social, and technological changes. It links innovation to resident well-being outcomes, including better services and more responsive urban governance. For pan-European audiences interested in sustainable housing, the report is relevant because it explicitly lists “housing” among the policy sectors where cities collect data and develop solutions, and it situates innovation as a way to address complex urban-system challenges that cut across planning, land use, infrastructure and social policy.
What “innovation capacity” means
Innovation capacity is defined as the human, financial, and institutional resources and skills that help city governments catalyse, implement and advance cutting-edge, collaborative and bottom-up problem solving. The report proposes three interdependent building blocks for innovation capacity: organisational arrangements (structures, leadership, staffing, HR processes), data management capability (ability to harness and use data), and openness to partnership (working with external actors such as academia, think tanks, private sector and civil society).
Survey insights and key data points
The survey results highlight concrete patterns across the 89 cities. More than half reported formal innovation goals (55%), while just under half reported having a formal innovation strategy (49%). Leadership commitment is repeatedly emphasised, with about 80% of surveyed cities identifying political and managerial leadership as essential for supporting innovation capacity. Data plays a significant or somewhat significant role in innovation decision-making for 85% of surveyed cities. On data availability by sector, cities reported collecting more data on transport (64%), policing/law enforcement (57%), land use/zoning (51%), and housing (47%), while social welfare and inclusion (32%) and culture (20%) were less extensively covered.
Organisational set-up, funding and evaluation
The report describes the rise of dedicated innovation roles and teams as a relatively new practice in municipal government: only 21% of innovation teams had existed for more than five years at the time of the survey. Around half of innovation teams sit in the mayor’s or city manager’s office, and nearly 30% have their own department. Funding is presented as a key enabler: 80% of respondent cities reported having specific funding to support innovation capacity, and 94% of those with specific funding reported ring-fenced resources from the municipal budget. However, comprehensive evaluation is limited: only 16% of cities with formal innovation goals reported conducting a comprehensive and systematic evaluation of the impacts of their innovation strategy.
Partnerships and practical implications
A recurring finding is that partnerships can supplement internal capacity and help cities pilot, scale and evaluate initiatives. The report notes that among cities where data plays a key role in innovation work, 75% have established partnerships with academia and think tanks to improve data management. Overall, the report positions structured strategy, data capability, funding, leadership and external collaboration as the core ingredients that allow city governments to deliver improved outcomes across urban policy areas, including those directly shaping sustainable housing and the built environment.