Since 2005, Dr. Judith Rodin has been the president of the Rockefeller Foundation, a philanthropic organization that works to promote the well-being of mankind worldwide. She was previously president of the University of Pennsylvania, the first woman to lead an Ivy League university, and provost of Yale University.

What do you consider to be a critical event that helped you become the leader you are today?

When I arrived at the University of Pennsylvania, I was extremely discouraged to see the plight of the neighborhood around the university. I grew up in that neighborhood and attended public school near the university, so seeing most businesses closed, houses boarded up, one in five children failing was awful and I wanted to do something. I was advised that that wasn't my role--I had come to run an Ivy League institution and I should pay attention to doing that. Two months later, a graduate student was murdered in the neighborhood, and I threw out all the advice and said 'we can fix this' by partnering with the neighborhood. We set out a five-part strategy to rebuild that neighborhood in safety and security, commercial and retail development, job training, public schools and housing. With our partners, we initially financed a lot of it alone, but ultimately we gained believers. We transformed the neighborhood, and it was an enormous leadership learning opportunity for me about following your own north star, the power of partnership and the capacity to seek transformation because it is possible. It's not easy and it's not quick, but it is possible.

How can federal leaders create an innovative culture in their agencies?

There is an old saying that culture eats strategy for lunch, and I think that's true. There's often a lot of discussion about having the right strategy, but for innovation it is more important to create the right culture. Culture is often difficult to change, but it is imperative if an agency wants to be innovative.

There are a few things that an agency leader should do that would encourage innovative activity and will help to begin to change the culture. First, make a very public and specific commitment to innovation. Then, encourage staff to innovate correctively. If you can get them to innovate correctively around agreed upon goals that overlap with the real everyday work, that's a great trainer for culture change and sparking innovation. Finally, put a system in place that sparks experimentation and idea generation that can be viewed as having impact for the recipients of the work, because people feel proud when they are able to create impact.

What are the best ways to innovate during budget cuts?

Innovation most often occurs during times of budget or financial stress. Often the private sector organizations that innovated best were ones that invested in innovation when the finances were worse.

The Rockefeller Foundation has been focusing on three kinds of innovation: organizational, process and market innovation. The most effective organizational innovation is creating new kinds of networks, whether it's different kinds of stakeholders that didn't work together or communicate with one another before or engaging the broadest domain of stakeholders. For example when you're in a financial crunch, you hunker down and talk to the smallest group of people and those that are most like you. However, organizational innovation requires just the opposite--stepping back and using new networks of stakeholders, the less obvious cast of characters, to help you redefine the problem.

We've also seen federal agencies starting to take up process innovation, whether it's crowd-sourcing or design thinking. Your thinking is transformed by opening the search for good ideas to a much broader group. Finally, in market innovation, we are going to need to see more public and private partnerships. When there isn't enough money, we have to break down the barriers between the public and private sector financing for the benefit of the overall public and advancing innovation.

What are some common traits of an innovative leader?

Flexibility and smart risk-taking, which means that you are taking a 'learn as you go' approach. You can't figure everything out in advance. Be willing to take smart risks but be really vigilant so you're continuously learning from what you're doing. Then, there's the capacity to see around corners and what I call 'riding waves'--seeing momentum building and figuring out a good way to harness, capture and ride it.

What can the U.S. learn from foreign governments to become more innovative?

We see a tremendous amount of innovation going on in governments around the world. The British government has what they call a minister for the third sector, meaning there's somebody with cabinet-level responsibility who is responsible for and interacts with the NGOs, civil society and private foundations. It's a great way of getting government to open its networks more effectively and be part of networks that otherwise they would not have access to and would often get themselves at odds with.

In 2000, the British government also formed a social investment task force asking how to wholesale and channel capital into the social sector. The question is, are there ways to broaden the investments beyond the government or to make the government investments more effective and efficient in innovative ways? We're searching the world for and funding a lot of these innovative activities with regard to what government can be doing, and we think it is a huge financial opportunity at a time when our resources are strapped.

Federal leaders, on Thursday, March 10, the Partnership for Public Service and Hay Group will release Innovation in Government, a new report that studies the unique attributes of federal leaders who have successfully promoted innovation. To learn more, please click here.