Can a government department really act like a startup?

The elusive goal: emulate the best examples of private sector innovation in government. Communications Minister Malcolm Turnbull has been a long-time advocate, and now has a “Digital Transformation Office” to test the theory.

But how realistic is a startup mentality inside government?

There’s clearly fundamental differences between a team of public servants and a successful startup. But business professor Roy Green believes there’s no reason why some of the key elements like design-led innovation and disruptive business models can’t be imported into the public sector. It just might not be the actual small startups that offer the best examples to follow.

Green suggests governments follow the lead of large corporations. Faced with competition from small, low-cost startups, many are trying to harness the same kind of creative energy through internal startups and business incubators. These in-house innovation efforts build on the idea of a Skunk Works — a research and development team given the latitude to tinker with new ideas — but take it a few steps further.

“This is not just in R&D department but through cross-functional teams, collaboration, the exchange of ideas, and then the implantation and commercialisation of those ideas within the context of the large organisation,” the UTS Business School dean told The Mandarin. Public sector organisations can do the same thing in some areas, he says.

“Some of those activities may be less open to innovation … but for new ways of providing services, new ways of collaborating on new ideas, or new policy initiatives, there’s no problem incorporating those behaviours into the public service — if there’s a desire to do so.” Green suggests perhaps the DTO — Turnbull says it will “operate more like a startup” — will look at new business models and design-led approaches as well as digital solutions.

“A lot of the services in the private sector are now being reconstructed by service design experts who work in those organisations, and what they’re doing is shaping services around customer experience, creating customer-centric organisations,” he said. “Everybody in the public service would hope to do that, I think, but often they don’t have the tools or the support to do it, and perhaps what Malcolm Turnbull is getting at is that the DTO will apply a little bit of digital disruption within the public service to enable it to be more customer-centric.”

Turnbull expressed his belief that public service leaders should be less risk-averse and more tolerant of failure at The Mandarin’s launch event last year. According to Green, that’s the biggest lesson they can learn from entrepreneurs and startups.

“The public service shouldn’t be afraid of risks,” Green said. “The idea of entrepreneurship would probably send a shudder down the spine of some senior managers in the public service, but essentially they need to create space in which new ideas, new ways of doing things and new ways of organising their own institutions can be experimented with, and I think, as in the private sector, there has to be a tolerance of failure as well.

“Not all of those experiments will work, and if they don’t work then it shouldn’t be a matter for dismissal or reprimand, it should be a matter, as in technology hotspots around the world, of trying again in a different way. I think the motto in most startup communities is ‘don’t make the same mistake twice’.”

Innovation drive out of Adelaide

Intrapreneurship — entrepreneurial behaviour within a large organisation — is the subject of a forum this Friday organised by the South Australian branch of the Institute for Public Administration Australia. Futurist Kristin Alford will present the results of a survey conducted by her foresight agency, Bridge8, in order to “understand the attributes, issues and future challenges for intrapreneurs” in the SA public sector.

“There were lots of capable people within government who were acting in intrapreneurial ways, so they had the skills and they had the capabilities,” Alford told The Mandarin.

“Some of those are technical skills obviously, but they also had the soft leadership skills, like being able to run a network within government and outside of the government, being able to influence people, good listening skills and being able to ask hard questions in a way that is going to get you a good response. People had those skills and capabilities so it wasn’t a matter of a need to drive professional development.

“Where they struggled a little bit was around structures and cultures in the organisation — and again, this is variable depending on the part of government that they’re in — but often there’s not necessarily support for people who are bucking the system, or the culture is one where there’s a low appetite for risk, so things are done more cautiously. Those were the frustrations that people who are really passionate about change were coming up against.”

Alford suggests organisational structures and cultures could be made “more amenable to innovation and change”, but at the same time points out that “confronting those barriers is actually what drives the intrapreneur anyway”. Disruptive ideas are defined by what they disrupt.

“So the other part of the message is … recognise that those intrapreneurs are locating new and interesting problems to solve and give them the ability to keep doing that, and the support for that,” she said. “That might be through networks or it might be through secondments or different experiences and ways in which they can keep that interest up …

“I think you want to be making it easier for innovation and change to happen in the normal course of work, but you also want to be able to support intrapreneurs to tackle the things which are really hard and challenging, and they’ll do that because they have a passion to make a difference and they’re interested and curious in facing those challenges.”

Green also believes that curious, innovative people who attack problems with out-of-the-box thinking are already found throughout the public sector. But not everyone can do it, and it’s not appropriate everywhere.

“Where it is appropriate there will always be people who want to test out new ideas, new ways of working, new ways of delivering services and developing new initiatives,” he said. “And in so many cases — I’ve seen it myself and most people in the public service would have seen it — these people have their ideas suppressed, or they’re told to do something else, or they have to get another job.”

Don’t try to be something you’re not

Matthew Salier is also on the bill for the IPAA Intrapreneurship Forum. As director of Flinders University’s New Venture Institute, he’s noticed a growing appetite for more nimble, agile ways of providing services that would never be provided by the private sector.

“That doesn’t mean entirely changing everything they do,” he told The Mandarin, “but really pushing the limits of applying principles that work in the startup world to their existing paradigm.” He says one tried and tested principle that can be successfully imported into the public sector is to define a desired outcome, but leave all the steps to achieving it up to the intrapreneurs. The other side of the coin is culture.

“I think ‘innovation’ and ‘entrepreneurship’ are bandied around a fair bit in Australia at the moment,” said Salier. “Everything’s trying to be innovative and entrepreneurial, but when it comes down to it, it’s about behaviours that create new value. And I think that approach is really important in the public sector space, as much as it is in the private space.”

Developing a culture more like a startup than a government agency isn’t simple. A larger risk appetite must be strongly supported and encouraged at ministerial level, and that support could always vanish in a puff of political smoke. Startups work quickly and cheaply to come up with a minimum viable product, whereas the community has certain expectations for the quality of work their government puts out. The relative importance placed on getting a steady stream of new ideas flowing and maintaining standards befitting the government also depends a lot on the minister and the government of the day.

Public service pilots are pretty common, but failed pilots less so. Rather than setting a low bar for evaluation and presenting every marginal idea as a stunning success, the public service organisation that aspires to startup style innovation must be comfortable with admitting failure and moving on, according to Salier.

“It’s OK to have a go at something and not get it quite right and I think the political nature of the public service means that that is a different proposition than it might be in other parts of the community,” he said.

“For a hacker building an app over the weekend, the risk, on many levels, of users not using it or not having a good experience, is far less than for a team in a government department building something over a weekend, and trialling it with a couple of hundred users.”

The key is being comfortable with public servants who challenge existing paradigms and actively encouraging that kind of behaviour. But, says Salier, “that doesn’t mean you throw everything away and start doing rapid prototyping at every turn.”

There is value in trying to be “more like a startup” in some cases, but at the end of the day, the public service is not Silicon Valley, and its goals are more complex than simply getting rich. As for Turnbull’s new DTO, Salier says it will be interesting to keep an eye on exactly what eventuates.

“That’s not what you’re used to in this space, so I think it’s really positive to see that language used. But it comes down to when the rubber hits the road, right? … I think it’s a positive but the political will needs to be behind it; that’ll be the litmus test, I believe.”

More at The Mandarin: Transformation agency caution: ‘digital lipstick won’t work’

This story originally appeared on The Mandarin.