Innovation seems to be this decade’s buzzword. It’s what “synergy” was to the 1990s, but what does it really mean?

Put simply, innovation is the process of improving, adapting or creating a product, system or service. According to federal employees, some agencies do it better than others.

The latest Best Places to Work in the Federal Government analysis from the Partnership for Public Service and Deloitte suggests that employees are willing to innovate, but lack support. Ninety-two percent said they are looking for ways to perform their job better, but only 59% said they are encouraged to come up with new and better ways of doing business. Even fewer, only 39%, said that creativity and innovation are rewarded in the workplace.

Overall, the 2011 government-wide innovation score, based on an index developed from three questions on the Federal Employee Viewpoint Survey, was 63.2 out of a possible 100, staying flat since 2010. On the one question for which private-sector data is also available, “I feel encouraged to come up with new and better ways of doing things,” the government lags the private-sector by 11.8 points.

These are alarming findings when you consider the times. Federal agencies are facing steep budget cuts. Retirements among federal employees are on the rise, and agencies may not be able to backfill every position. The reality for federal workers is that they are being asked to accomplish more – that is deal with increasingly complex challenges and serve a greater number of citizens – with fewer resources. And the only way to do that well is to innovate.

Who does it well? It probably comes as little surprise to you that NASA is innovative. Innovating is how NASA achieves its mission and it’s an inherent part of NASA’s culture. Employees give NASA an innovation score of 75 out of 100, a full 12 points above the government-wide average. But federal employees also give high marks on innovation to the Nuclear Regulatory Commission, the Federal Deposit Insurance Corporation and the General Services Administration.

The Office of Personnel Management was the most improved large agency on innovation, improving its score four percent from 60.6 in 2010 to 63 in 2011.

At the other end of the spectrum, federal employees gave the lowest marks (a score of 52.9) on innovation to the Securities and Exchange Commission (SEC). Only 23.5% of SEC employees felt that creativity and innovation are rewarded, a sharp 17.3% decrease since the 2010 survey. However, SEC employees said they felt more encouraged to come up with new and better ways of doing things, suggesting that there is a disconnect between what leaders say they want from employees and how they actually respond. Other agency innovation stragglers include the Department of Homeland Security and the Department of Transportation with scores of only 55.3 and 56.2, respectively.

But what drives innovation? If a federal leader wanted to create a more innovative culture, where to start?

There are six workplace conditions that have the biggest impact on agency innovation scores, based on an analysis of the federal survey questions. The conditions range from employees having a sense of personal empowerment and an opportunity to demonstrate leadership to recognition for good work and regard for senior leaders. Of the six factors that influence the innovation score, the lowest score was on employees’ perception of their empowerment with respect to work processes; the highest was employees’ feeling that they have a real opportunity to improve their skills; and the factor with the greatest drop since 2010 was related to employee satisfaction with their involvement in decisions that affect their work.

Knowing what conditions foster innovation provide federal leaders and managers with insights into how to do it better and knowing which agencies top the list on innovation means leaders can exchange ideas and learn from each other.

For government, innovation means creating new ways to solve challenging social problems, improve agency performance, accomplish goals and better serve the American people. And with today’s fiscal constraints, innovation isn’t optional; it’s a national imperative.