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Digital Pulse

in·no·va·tion – A creation resulting from study and/or experimentation. The act of starting something new.

dis·rup·tion – An act of delaying or interrupting continuity. An event that results in displacement or discontinuity. The act of causing disorder.

Digital change is a journey, not a destination.
It requires agility and flexibility to underpin a continually evolving business environment.

Industry Change – The ongoing economic, technological and social development of commercial business and market sectors.

Balancing on the tightrope: How government can embrace innovation in a high-risk world

Balancing on the tightrope: How government can embrace innovation in a high-risk worldKey takeaways

  • Digital transformation has the potential to create better public services, accountability and transparency.
  • However, media and public scrutiny make it hard for government to take risks in innovation.
  • Innovation labs, public participation and data openness could allow the public sector to innovate with less risk.

Disruption is the zeitgeist of our generation, so it was no surprise to find it was a focus of the Institute of Public Administration Australia (IPAA) Public Sector Week this year. The event, held in Melbourne, brought members of the public sector together with thought leaders in disruption and innovation, to inject creative and lateral thinking into solving public sector issues.

One of the recurring topics was that of digital technology and how it offers government the scope to improve service delivery, be more publicly accountable and deliver greater transparency.

To fully embrace the possibilities that digital transformation has to offer, those in government need to put a stop to old, comfortable processes, and explore new ways of working that may initially feel uncomfortable or risky.

Can government afford to embrace failure?

With increasingly fast news cycles, growing demand for transparency, and declining public trust in government systems, public scrutiny over bureaucratic actions is at an all-time high, especially if it attempts anything that involves risk or is different to how it was done in the past.

Risk is common in nearly every industry of course, but it is often fundamental to creation. Can government be afforded the same luxury of risk taking? Can it be allowed to embrace failures and learn from them as other industries do? Perhaps not, was the consensus at the IPAA forum. Yet those working in the disruption game understand that failure is a part of an innovative culture.

Just last week, Australia’s Assistant Minister for Digital Transformation Angus Taylor released a statement alongside a government report into ICT procurement, saying: “A culture of risk aversion in government procurement had undermined the freedom to innovate and experiment. If we are to reward the entrepreneurial spirit, a new procurement culture is necessary.”¹

The question becomes one of how government agencies master the paradox of innovating without taking on too much risk. And if they do take risk, what is the threshold before it outweighs opportunities for innovative policy outcomes?

Here are three ways that governments can experiment, at a lower cost and risk, without investing beyond the point of diminishing returns:

Enabling a ‘quiet revolution’ through government labs

Too often, government agencies find themselves without room – metaphorical or physical – to experiment. Instead, they’re tasked with maintaining the integrity of current systems and processes without the time or agency to find better ways of working.

The pressure for ‘business as usual’ – urgent responses and the bureaucratic ‘control and command’ model which maintains stability and predictability – leaves no choice but to avoid risky delays to process, making it much harder to be open to change. So, how might government agencies carve out the time and space needed to think, plan and innovate?

Increasingly they’re building specialised innovation units, or labs, made up of specialist and diverse skills, fenced off to create room for innovation and any accompanying failure. Teams are sheltered from red tape and the low risk tolerance of traditional government, instead focussing purely on delivery and innovation within a set period of time, theme or problem.

There are success stories already in this quiet revolution – like Mindlab in Denmark, Policy Lab in the UK, and  the United States. Importantly, their successes are being measured by the two constraints that traditional government faces: risk tolerance and funding.

Expenditure processes in these labs are tied to outcomes and incremental goals – making sure regular outcomes are achieved, continually building towards a minimum viable product, and getting an idea of whether projects will be likely to work before investing heavily.

Bringing in citizens through participatory design

The very premise of democracy is based on citizen input into governmental decisions. With today’s technology, there’s an opportunity to take that participation beyond voting and judicial systems. Participatory design, where all stakeholders are involved in creation, and concepts like design thinking, provide ways to include citizens in the creation of products, services and public policy.

The benefit of including the public early on in innovation is that it helps ensure investment is occurring in the right places. As customers, citizens are often acutely aware of what needs to be fixed in their lives and what would or wouldn’t contribute towards that goal. Their involvement reduces the risk of failure in cases where innovation is addressing the wrong problem, or is solving it in a way that won’t be embraced.

Citizen advisory groups can form core parts of innovation projects – co-designing, producing and delivering services every step of the way. When President Obama took office in the US he initiated an Open Government Initiative that directed federal agencies to involve citizens in programs, proactively seeking their input.

In Australia, user-centricity is similarly at the core of the Digital Transformation Agency’s criteria for all services, the Digital Service Standard. While this may not directly prevent technical failures or avert cyber risk, it does reduce the adoption risk many government agencies fear when going digital.

Opening up data to enable innovation

One fundamental way government can tackle the obstacles of risk aversion and lack of funding is by enabling others to champion their cause through open data – the practice of openly sharing non-sensitive data with the public and other entities.

In line with customer expectations of transparency in other sectors, there’s increasing public pressure on government to also be upfront. In this new wave of industrialisation and disruption, government will feel increasing pressure to comply with such demands.

At the core of using champions is the very concept of ‘openness’ – shared economies, and shared data. By making data public, easy to consume and easy to plug into, government will enable others, such as the tech and private sectors, to solve problems in society that it hasn’t got the resources or risk tolerance to tackle itself.

Government may even choose to support or invest in ideas that have been validated in this manner, with reduced risk of failure and less need for direct upfront investment.

Walking the tightrope of government innovation

Managing the balance between risk and reward is tricky for government agencies in the innovation age but embracing new ways of problem solving doesn’t have to be time consuming, prohibitively expensive or high risk.

Through initiatives like ‘safe spaces’, or labs, in which to take creative risks, co-designing with the public, and the opening up of data to others for external innovation, the fall from the tightrope starts to feel shorter, safer and easier to get back up from until success is achieved.


Gulandam Khan is a manager in PwC Australia’s Experience and Insights Consulting practice. With thanks to Scott Sheldrick.

1  www.itnews.com.au/news/govt-caps-it-contracts-at-100m-in-tough-new-procurement-stance-471446

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