How to strengthen and leverage GovTech ecosystems

In a world marked by increasingly complex challenges, governments can benefit from reaching beyond the public sector for innovative solutions by tapping into new ideas from the GovTech ecosystem. But how can public sector bodies engage with early-stage innovators when it is often perceived as the riskier supplier - and how can they ensure it matches their needs while still pushing boundaries? 

Four leaders specialising in public sector transformation and innovation discuss how governments can strengthen and leverage GovTech ecosystems. 

Breaking down barriers 

Roy Zaban is a Strategy Manager at KPMG focused on launching innovation projects in the public sector. Prior to this, he was Head of GovTech at the Israeli NGO CREATORS, where he helped create the Israeli Government's open innovation strategy. He says radical shifts in citizen expectations and the rapid emergence of new technologies has led to the growth of GovTech as a force to be reckoned with. However, there are barriers preventing governments from drawing on this pool of early innovation, he notes. 

“I’ve spent a lot of time looking at ways to break the wall between entrepreneurs and governments. I see two main obstacles: government risk appetite and a lack of knowledge about how to properly engage with entrepreneurs.”

Open innovation programmes, accelerators and incubators offer a solution to both of these challenges, Zaban says; providing guidance and resources to support the growth of early stage innovators, while empowering the co-development of  digital solutions in government. A spate of these have been launched around the world, enabling public sector bodies to tap into the dynamism of the private sector - and vice versa. 

However, “I’ve seen many failures and many successes in this,” Zaban notes. Setting up and maintaining these types of programmes requires a careful understanding of how both worlds work; the secret is creating the right structured programme. “They need to manage risk while creating knowledge that will be relevant and valuable for both sides. Each side needs to understand exactly what it can receive, what outcome to expect and what the limitations are.”

Rachel Neaman is a technology leader specialising in digital transformation. She is a regular lecturer and mentor on PUBLIC’s GovStart and Strategic Innovation programmes, and a Faculty member of the Public School of Technology. 

She attests to the need for more co-creation, noting how GovTech start-ups too frequently work in parallel to public-sector organisations, rather than in conjunction with them.

“I’m not entirely sure that the GovTech world is responding effectively enough to what the public sector currently needs because of a lack of co-creation and iteration. There are still some misunderstandings about how the public sector functions as well as limited knowledge of what tech start-ups can and can't deliver.” 

GovTech could be "more alive" to the constraints under which civil servants work and the pressure to deliver within a very tight budget, Neaman adds. “Find a common language you can both speak and a shared goal to work towards.”

How to ‘spark the magic’ 

Arūnė Matelytė is the founder of GovTech Lab, part of Lithuania's Innovation Agency, which connects public sector challenges with solutions in the start-up space. Products developed so far in this format have been a major step forward in breaking down barriers and stereotypes, she says. 

The World Bank’s 2022 GovTech Maturity Index for Digital Transformation in the Public Sector showed Lithuania as an emerging leader in this space - rising in ranking from 39th to the 8th. Matelytė attributes the country's meteoric rise through the ranks to the fact it has a comparatively younger public sector with less traditions and entrenched processes, which lends itself well to innovation.  Simultaneously, with a fast-growing start-up ecosystem, "GovTech provides an avenue to channel some of that growth and enthusiasm towards solving public sector challenges," she adds. 

Another factor behind the country’s success in cultivating and scaling its GovTech ecosystem has been focusing on demand. Matelytė explains: “It's important to ensure that public sector employees have skills, mindset, tools, and resources to actually initiate GovTech projects.”

She adds that GovTech Lab has iterated every single time they’ve launched a new batch of GovTech programmes to ensure they are matching the needs of the public sector; matching its maturity, but also trying to push the boundary of innovation a bit further every time. 

“We found GovTech champions across the public sector that were relatively capable innovators on their own. They were the first to test our GovTech Programme and engage with start-ups. This helped us test our programme but also build first success cases that can inspire other public sector organisations.”

This is why creating safe spaces for co-creation is so important, Matelytė explains. “Ideally, having structured programmes like one at GovTech Lab helps, but sometimes various networking events or even industry days can serve the purpose of putting public sector officials and innovators in one room to spark the magic.”

Agility and flexibility 

Matelytė sees another crucial component for GovTech: Agility and flexibility. “Government’s need to give GovTech start-ups the resources they need to deliver on the needs of the public sector, and ensure that they not only have skills but also access to patient VC capital and other avenues to scale their solutions,” she says. 

At the same time, countries wanting to collaborate with these ecosystems should not try to fit it into traditional public sector practices. Government procurement processes tend to favour large, incumbent technology suppliers or expect applicants to meet strict specifications; an approach that staves off new entrants and closes the door to innovation. 

Zaban says it’s about finding a way to ensure that start-ups can get a foot in the door, while giving government agencies the flexibility to control what level of intimacy they want start-ups to have with their IT systems. 

Scotland’s CivTech Programme is a good example of this. The programme narrows its selection process for suppliers down to three companies, which receive minimal funding at the first round. In the second stage, that number is reduced to one or two companies that receive more funding, before the final stage where one company is selected to receive a larger amount of funding. 

Processes like this enable procurement and delivery teams to assess the specific needs and cultural fit of the supplier, Zaban notes. 

Failure, innovation and culture

A lack of innovation, culture or digital skills often precludes the public sector from looking for out-of-the-box solutions.

To better support GovTech ecosystems, they first need to get better at instilling a culture of experimentation and innovation across its practices, says Bianca Wylie, Partner at Digital Public - a public interest digital governance firm. Wylie is also co-founder of Tech Reset Canada, an organisation advocating for innovation that is focused on prioritising the public good.

She highlights how governments have no culture that allows them to fail. “Failure, iteration, and adaptation are necessary and governments do not have any cultural allowance for these things. Government procurement is not incentivised to create new markets, they are incentivised to support the status quo.”

Zaban believes governments can benefit from building and working with an internal network of innovators. “Once you have people in your department that are talking about innovation, that hold even roles like Chief Chief Innovation Officer, you have places to talk about innovation, you have people to consult with, and you can start to feel like you are part of something that is bigger and more advanced.”

However, breaking away from the rigidity of public sector process and procedure is easier said than done; it requires a recalibration of innovation and risk. On this, Neaman says it can be helpful to focus on a shared outcome. “This allows for different ways of thinking about how to deliver that outcome and allows for greater innovation.”

Accelerators and innovation labs - like those being launched by MOD  - can encourage this change by helping public bodies identify the right partners in the innovation community, However, Neaman notes that these are just “small pockets of change” in "enormous multifaceted organisations”. In other words: “They don't always have the traction or scale to make meaningful cultural change."

More important, she believes, is the need to make the case for why working with GovTech is going to be so much better for them. "I don't think the case has yet been fully made.”

The challenge in government is how to innovate within the constraints the public sector faces; innovation needs to move solutions forward rather than just continually experimenting. “The word innovation is becoming overused,” Neaman adds. “There's little point in doing something differently if it's not going to have an improved impact. Innovation for its own sake is not enough.”

‘Government is not Netflix or Amazon’

A mistake often taken by governments when approaching GovTech is to try and graft the consumer tech experience onto the public service. 

“Governments need to create a culture of public service product management to ensure that public service expertise is shaping the market -  as opposed to  the market shaping public sector tech delivery,” Wylie says. “The government is not Netflix or Amazon. These firms operate in drastically different contexts. To serve the public well, tech must serve the public service well too - and first. We need to consider how we can use tech to better support public servants.”

For this to happen, governments must invest in public service tech capacity. “There is no escaping the necessity of this investment,” Wylie notes. From public lawyers that can support digital rights to procurement officers that can ensure public power is maintained over public systems, to facilitators and process experts that will ensure that public technology is designed by subject matter experts, not IT departments.

She emphasises the need for governments to prioritise subject matters on any innovation projects: “They must create the capacity for the stewardship of any new tech-supported products and services to be managed by public governance models. They can set up digital infrastructure trusts to build rules from the full life cycle of products - from design to maintenance to sunset.”

To leverage and strengthen GovTech ecosystems, Wylie says it is important to draw clear lines of authority for tech solutions that “put and keep the public sector in charge. Don’t work outside of contracts with vendors and call it partnership.”

She adds that these are highly reasonable requirements for firms that want to compete and benefit from public monies. "It will take a while to undo many of the mistaken approaches that governments have taken to GovTech to date and to create new markets to support public digital infrastructures.”

The future of GovTech 

Within the GovTech ecosystem there is an increasing focus, not just on piloting new solutions, but finding ways to scale them across the public sector. 

Zaban believes this will spark a move away from GovTech's focus on "pure governmental issues". Amid new and pressing challenges facing countries, Zaban says he expects to see GovTech broaden its remit to solve problems that are not directly related to government, but still fall under their remit of responsibility in some way - like decarbonisation solutions. 

However, Matelytė cautions that as GovTech becomes more mainstream, “we need to make sure it does not become a buzzword for general digital projects.” At its core, GovTech is about collaboration with innovative companies to co-create digital solutions and “should remain to mean something specific” if it is to continue making a positive impact, she notes.