Drawing on Foucault’s writings on power, neoliberalism, and the dispositive, this article analyses the identity politics that is immanent in a new collaborative practice between the public and private sector called public-private innovation (PPI). We argue that PPI is an element in actualizing a neoliberal market dispositive through inclining subjects to work on themselves in order to actualize their entrepreneurial self, thereby disconnecting them from their public service identity. The construction of two narratives supports the constitution of the political space of PPI: the fiery soul narrative and the need narrative. An important part of this identity politics is the construction of the narrative of the individual entrepreneur. Rather than expressing new public governance in the public sector, PPI actualizes a dispositive that marketizes public services as part of a neoliberal agenda. The narrative of PPI distracts from the marketization of public sector and leaves no other space for public-sector employees than to constitute themselves within contradictory feelings of enthusiasm and anxiety, determination and self-blame, responsibility and inadequacy, and bustle and confusion.