Who should read this blog?
- Are you a public sector organisation looking at how to innovate?
- Are you interested in how emerging technologies can disrupt existing services?
- Or, do you have some time to kill on public transport?
How long do you need? This one is a bit of an epic, you will need to set aside 10 minutes.
Ok, let’s go . . .
In times of austerity the dilemma public sector bodies around the world are facing is a tricky one. Should you a) raise tax b) make further hard decisions about service cuts, or c) both of the above. Thankfully there is another way, the thing that is really needed here is disruptive innovation. Disruptive innovation is the phenomenon that delivers highly popular services at a fraction of the cost of the current established market cost, such as Skype for international phone calls or low cost airlines for domestic flights.
While we see many great examples of innovation in the public sector (this week I met a local council leader that is twitter bullying a global fashion brand for stealing a traditional local design!) we rarely see the sort of disruptive innovations that enable services to be delivered at radically cheaper prices.
In 1995, the Harvard Professor, Clayton Christensen defined disruptive innovations as “an innovation that creates a new market and value network, displacing established market leaders”. To qualify as disruptive innovation, a new market entrant offers a service to the bottom end of the market or a previously underserved customer segment, they achieve rapid adoption before increasing service quality to topple the established market leaders. Clayton suggested that this absence of disruptive innovation is the cause behind the productivity difference between the public and private sector (0.25% increase in public sector productivity between 1997 and 2012 vs. 1.7% in the private sector).
Now, clearly disruptive innovation is by its very nature disruptive and therefore challenging for established bodies to achieve. Given the current challenges of budget reduction and the opportunities offered by digital technologies, we believe now is the time for the public sector to explore this topic.
During this blog I will discuss:
- The impact digital is having on citizens
- How this provides opportunity for disruptive innovation in the public sector
- An approach to help you be successful at applying disruptive innovation
But before we go any further, it is probably worth sharing a definition for digital. I see digital as wider than just a new channel or adopting a bit of UX or open source. I see digital as, any technology that successfully achieves mass adoption and the new services and business models enabled by it.
So how is digital impacting citizens?
I believe that digital is changing the way citizens want to engage and communicate with public sector bodies, along with their expectations for the service they will receive.
If you are online do a quick Google image search for the Pope’s inauguration in 2005 and 2013. The stark difference between the two images shows the changing ways that citizens choose to engage with experiences and organisations. In the UK the increase in smart phone adoption over this period is equally as stark.
Digital is also changing the way people choose to communicate. While generations are very broad generalisations, it is possible to see a trend in preferred communication methods. From the use of letter of the maturists, the phone conversations for the baby boomers and the rise of email, text and social for Gen X through to Z.
Finally, digital is changing the expectations citizens have for services. If you compare the ease of use of any leading mobile application vs. the challenges of engaging with public sector services, it becomes obvious that the unanswered phone lines and auto generated emails of public sector services are suboptimal.
So what does this mean for the public sector?
The impact of digital technology and the changing citizen mindset provides opportunity for public sector organisations to be disruptive and rethink services. Here are three potentially disruptive innovations that we believe public sector organisations should be considering.
Idea 1 – Design all services as mobile first. Though nobody has nailed it yet there are some great examples of governments making progress:
- In Kenya, the M-Pesa mobile payments system accounts for 42% of GDP
- In Estonia, a single eID allows citizens to access over 600 government services. This enables tax return submission in an hour and refunds within 48 hours. Also, brilliantly, by law the government may only ask a citizen for the same piece of information once
- In Sweden, they have been even smarter and just repurposed existing bank IDs as the identity mechanism for mobile services
Idea 2 – Rethink what assets, resources and services you need to own. With the rise of the sharing economy and ideas such as government as a platform, public sector organisations should think hard about what services they deliver and whether or not ownership is the right model. There are already some great examples:
- Direct Homecare are a French start-up that have created a platform to connect care givers with care receivers. In 2012 they launched this service in London. They already have 1,500 carers signed up and are delivering 97% customer satisfaction, at a quarter to a half of the cost to serve of the comparable public sector service.
- An example from the US, during a Code for America event one participant created Adopt a Fire Hydrant. This innovative idea looked to solve the problem of fire hydrants in Boston being covered with snow and not working when they were needed. At the Adopt a Fire Hydrant website citizens chose to adopt a hydrant. If they adopt they are then responsible for looking after it and ensuring it is clear of snow. If you didn’t do this, another citizen could come along and adopt your hydrant. This lead to different citizens creating empires of fire hydrants and the government effectively outsourcing this task to citizens.
Idea 3 – Rethink the role of a centralised government. With the growing understanding of blockchain technology, it is possible to see how many public sector services could be delivered on a distributed architecture rather than centralised institutions. We are already seeing many use cases and are busy building some very cool proof of concepts in our Applied Innovation Exchange.
So how do public sector bodies be successful?
We believe that adopting any one of these innovations, or any of the other good ideas out there, will not cut it. The rate of change of technology advancement and the rapid speeds at which these technologies are being adopted is leading to huge uncertainty. This uncertainty means the traditional approach of doing some strategy, to explore an idea before implementing and transforming is no longer adequate, instead organisations need to be able to test & learn. In short they need to get good at applying innovation.
In our Applied Innovatoin Exchange we follow a framework of discover, devise, deploy and sustain. This helps us manage the innovation process and be disruptive:
- In discover – we look at sourcing ideas, engaging with an ecosystem and looking at the adjacent possible
- In devise – we take these ideas and rapidly generate tools to test them, whether this is a, Proof of Concept, an MVP or something as simple as a sketch on paper. The key point here is not the ideas but the ability to test the ideas and learn from them
- In deploy – we look at the architecture, infrastructure and institutions needs to rapidly scale the ideas
- In sustain – we look at the things we have done before, the ideas we have left behind and the effectiveness of our innovation process
It is this framework that lets us rapidly test and learn to create disruptive innovations. If you get this process right, we believe it actually doesn’t matter what sort of ideas you explore in discover, if you are testing and learning properly you will end up in the right place.
Which reminds me of that Bananrama song . . . when it comes to disruptive innovation . . . it ain’t what you do, it’s the way that you do it!