This study aims to determine the innovation development strategy, the condition of performance management, and the obstacles encountered in developing innovation to improve performance management at the Department of Transportation of Gunungsitoli City. This study employed a qualitative approach with a descriptive research design. The research informants consisted of six people, including one key informant, one main informant, and four supporting informants selected using purposive sampling. Data were collected through semi-structured interviews, non-participant observation, and documentation. Data were analyzed using the Miles and Huberman interactive model through data reduction, data display, and conclusion drawing. The results showed that the innovation development strategy at the Department of Transportation of Gunungsitoli City was implemented through work process improvement, strengthening leadership and coordination, utilization of technology and digitalization, and improving human resource readiness in facing changes. Performance management was implemented through planning and task distribution, work implementation, monitoring and evaluation, as well as coaching and feedback. Innovation contributed to work effectiveness and service quality through easier data management and retrieval, faster work processes, process simplification, and clearer service information. However, innovation implementation still faced obstacles related to employee readiness, limited facilities, and adaptation to change. These obstacles were addressed through communication, leadership direction, coaching, assistance, support among employees, and gradual implementation of changes. Thus, an innovation development strategy supported by human resource readiness, leadership, coordination, and adequate facilities can strengthen performance management, improve work effectiveness and service quality, and support more effective, efficient, responsive, sustainable, and optimal task implementation in meeting community needs.
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