This article is based on the role that innovation plays in the institutional performance of the public sector, especially given its participation and support in all sectors and society. For this purpose, the analysis of the Integrated Model of Planning and Management - MIPG, which is a system that allows measuring the institutional performance of public entities in Colombia, through management policies that allow defining indicators at the national level, one of them being knowledge management and innovation, considered as a crosscutting policy, is proposed. This study conducted an analysis of 112 variables through the structural equation model that allowed relating the indicators generated by the MIPG during 2018 and 2019 in entities of the territorial order, in order to identify relationships between performance indexes and the knowledge management and innovation policy, and to evidence aspects to be strengthened to enhance institutional development. Finally, the results show that Colombia must strengthen the training and assurance of human talent, knowledge management and internal control, in order to obtain a highly effective institutional development.