Daniel Korski debates how best to think of GovTech and the role of startups in transforming public services.
Technology holds out great promise to transform public services like never before, making them more effective, personalised and accessible. However, a debate is now beginning to emerge about the best way to ensure that new innovations, especially those offered by new firms, can maximise their benefit to public services.
The GovTech Summit in Paris, which brought together 2000 participants, including ministers, officials, innovators and investors, is a great example of the excitement in the sector. Programmes like CivTech Scotland and the GovTech Catalyst in UK, as well as recent initiatives in Poland, Denmark and many other countries to support startups to work with the public sector are now turning this excitement into practical outcomes.
There is no settled definition of GovTech yet. At PUBLIC, we have made a number of efforts to outline the term and how best to think about the concept. It is still an opera aperta and we welcome new ideas. Our latest attempt can be found here.
Tom Loosemore, who helped set up GDS and is a guru of digital government, has now entered the debate with a blogpost about GovTech. What he and the GDS chieftain Mike Bracken accomplished, under Francis Maude’s leadership and David Cameron’s auspices, to accelerate the digital transformation of government digitally was extraordinary. His views are important.
In this post, Tom takes issues with the ‘slippy’ concept of GovTech. He seeks to describe two different kinds of GovTech firms: startups seeking to help governments to improve their public services; and startups seeking to replace government in the provision of public services. Naturally, Tom endorses the ‘helpers’, but warns the reader to be wary of the ‘replacers’.
But this ‘help-vs-replace’ dichotomy is not quite right as a description of what the market actually looks like. Nor is it helpful as a vehicle to set a debate up to address the challenges of the next phase of digital government, not least how governments can best set the rules, organise services, oversee data, and procure products and services especially from startups.
What is a GovTech company?
First, there are not just two kinds of GovTech companies (‘helpers’ and ‘replacers’): there are many. There are, for example, companies that are creating a service which did not exist before. Take Valerann, for example: a startup that has developed sensory, IoT smart road studs that produce real-time, high resolution information about everything that takes place on the road.
The company’s aim is to provide unprecedented levels of intelligence about what is happening on the UK’s motorways – and, ultimately, to use the same infrastructure to provide connectivity and control for autonomous vehicles. You could argue that it helps governments, but I would argue that it goes further than this: it creates the potential for fundamentally new services which may in future only be tangentially related to roads management.
In that way, technology is beginning to offer public services what it has offered almost every other commercial market, from retail, to taxis, to hotels. That is, technology companies are now transforming the offer rather than just improving (or, indeed, replacing) it. So, if we have ‘helpers’, and ‘replacers’, we also have ‘transformers’.
Now, onto the ‘replacers’. Tom expresses his disapproval of firms that seek “to replace government in provision of public services” not least, as he adds, because they are prone to “creaming off the easy-to-serve”. This is an important point that needs addressing.
He gives the example of two companies to prove his point: Adzuna’s Find a Job service on GOV.UK (a ‘helper’), and Babylon’s GP At Hand (a ‘replacer’). I do not agree with this distinction. Indeed, neither are ‘replacing’ public services. In fact, they are both offering the same thing: both the NHS and DWP are using technology to offer the public an important online service. And instead of trying to build these capabilities in-house, they working with these two very impressive British startups.
(Disclosure: Adzuna was in PUBLIC’s GovStart accelerator programme; we have no commercial relationship with Babylon).
You could, of course, argue that the government should not use private sector providers for any services. But taking such a view seriously would logically see the government taking over everything, however technical or niche: from pharmaceutical production, to operating ferries, to running BT, etc. There is no popular support for that sort of approach, and a lot of evidence to suggest that it would be economically ruinous.
There is a more broadly accepted argument that the UK has outsourced too many services, and has lost control of those that it has outsourced. If this view is true, however, technology startups are certainly not the culprits.
But why rely on new companies to improve the design and delivery of certain digital public services? There are number of reasons.
The first is that startups are better suited to conducting experimental or highly innovative service development. Not only are they culturally more comfortable with innovation, but they do not have the same political constrictions as governments. There is good reason for this: it is easier for a startup to justify experimenting with state-of-the-art technology, creative business models, and ambitious product offerings than it is for government. ‘Experimental budgets’ within the Home Office, the NHS, or the Cabinet Office are never easy to explain. They are almost impossible to explain when these experiments fail.
The second reason that many services are better delivered by startups is that a private solution can be built for more than one market, and so can build on countless experiences in many markets to upgrade its offering. A public solution, built for one market, has a much smaller set of experiences to learn and evolve from.
The final reason is that technology startups offer highly specialised, deeply technical products and services that governments struggle to match. Many startups – and this is particularly true of GovTech startups – are founded by practitioners, academics, scientists, and deep subject matter experts who, in the private sector, can partner with the best developers, product managers.
Government innovation, however, is often (but not always) characterised by top-down planning and strategy by groups of highly capable generalists. It should be no surprise that when a niche technology is required, highly skilled subject matter experts can better join forces with top-of-class technologists to build solutions than if those people were both working inside government. Money is, of course, not irrelevant here. Government struggles to pay developers and data scientists the £100k+ salaries on offer to best-of-the-best in technology markets.
The central question is whether a service built by the government is able to constantly update itself at the pace of a startup, thus offering the greatest possible functionality to its users. My argument is that in many cases, startups are better placed to deliver digital innovation than the public sector.
None of this is to argue that innovation is the exclusive preserve of the private sector. I have worked for years in the public sector and need no convincing that it can be a driver for innovation – a case that is laid out carefully in The Entrepreneurial State. Indeed, government is full of entrepreneurial – or perhaps intrapreneurial – people, as is made clear by the many users of Apolitical’s innovation network for public sector officials.
What role for government?
That takes us to the issue of how to manage a market of private sector companies. There is no way getting around the fact that the more that government wants to rely on private providers, the more that it needs to know about that provision. ‘Only outsource what you know’ is an obvious, but important, adage. And here, government still has a lot of work to do.
There still are not enough people who can deal competently with technology companies. There are also serious problems with the way that government procurement works. The greatest problems for government have not been with new startups but rather with old corporates. Companies like G4S, Capita and Serco have ripped off the tax-payer in ways no startup ever has or could. And they have often done it with services that included a technology solution, like electronic monitoring of offenders.
So, if one is concerned about the state and taxpayers being ripped off by companies offering technology solutions, it feels like there are other and better targets than startups.
Tom is particularly worried about companies “creaming off the top”. This is an important issue. Equitable treatment is key to public services in a democracy. Moreover, it is right to ask question about the pressure piled on publicly-delivered services by driving more expensive cases, for example older patients with more complex illnesses, to them as privately-delivered services deal with younger and healthier patients.
But it is up to public officials to structure engagement with companies in a way that ensures equitable provision of services and that the balance of methods used – for example between walk-in clinics and online devices – is one that provides tax-payers the best value for money. So in the example that Tom cites, GP at Hand, the issues is not so much Babylon’s desire to service easier to reach customers but the flawed nature of the payment structure for GP services.
My point is simple: it is not an issue for companies – or more broadly, the market – to determine what is right, beyond following legal and ethical rules of behaviour. The rest is for policy makers. Taking aim at companies risks removing attention from ensuring the right systems and the right levels of competence inside governments.
From digital government to GovTech
The discussion about the nature of GovTech firms leads, finally, to a discussion about the nature of digital government a decade after the creation of GDS. The formation of GDS was a watershed moment – it moved us from the era of e-Government, provided by the large incumbent tech companies, to the era of digital government, with greater in-house capabilities and understanding.
But in the eight years since GDS was created, the capability of startups has been transformed. So too has the security and scalability with which they can offer services, thanks largely to the roll-out of cloud technology. We are leaving the period of digital government and entering the era of GovTech.
There will still be a large and important role for government and in particular organisations like GDS. Not always to build, but instead to be the rule-setter, to control underlying data so citizens can own it, and to be the manager of equitable, cheaper and better provision of services, whoever delivers them. That way GovTech firms can offer a better service to citizens, both in terms of service delivery and taxpayer money, and Government can ensure equitable, high-quality provision of services. To that end, we should embrace GovTech firms, not be disturbed by the innovations that they bring to public services.