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Why are Governments Digitally Transforming?

 

January 26, 2018

Government digital transformation is much more than optimizing existing processes. It’s not about analog thinking, as described in the What is Digital Transformation blog post earlier this week. extent of organizational change required for government organizations to digitally transform seems overwhelming. Why do government leaders spearhead deep and disruptive organizational change? How does digital drive change?

Nexus of Wicked Problems

Government organizations are at the nexus of societal “wicked problems“, or “social mess“. The social mess, as described by Robert Horn, includes the following characteristics:

  1. No unique “correct” view of the problem
  2. Different views of the problem and contradictory solutions
  3. Most problems are connected to other problems
  4. Data are often uncertain or missing
  5. Multiple value conflicts
  6. Ideological and cultural constraints
  7. Political constraints
  8. Economic constraints
  9. Often a-logical or illogical or multi-valued thinking
  10. Numerous possible intervention points
  11. Consequences difficult to imagine
  12. Considerable uncertainty, ambiguity
  13. Great resistance to change
  14. Problem solver out of contact with the problems and potential solutions

Governance Opportunity in Social Mess

The disruption of consumer and business markets by digital giants like Amazon, Apple and Google threatens public sector organizations. What is the place of government in the digital world? Institutions threatened with irrelevance seek out different perspectives.

There’s nothing that represents a “wicked problem” more than the 17 global Sustainable Development Goals (SDGs). The SDGs are interrelated, providing governments with potential positive network effects. Where can government start?

Government policy opportunities and challenges can be visualized.  We’ve adapted  PEST analysis for governments contemplating digital transformation. We call it GESCED for Governance, Economics, Socio-Cultural, Environmental and Digital. In our view, digital is at the centre of problem solving. This nexus is more government-focused than the “Nexus of Forces” derived by technology analysts Gartner, because it’s more than the impact and interplay among technologies like social media, cloud, mobile and information. GESCED analyzes how technology is part of the problem, and part of the solution.

Government Digital Transformation GESCED

This analysis from the FreeBalance Strategy and Innovation Group is part of our preparation for the FreeBalance International Steering Committee (FISC) and FreeBalance Ministers’ Roundtable (FMRT) in March. Our exclusive focus on government, and the customer-centric business model, drives us to create anticipatory tools. We also share this analysis with governments who are not customers as part of our mandate as a social enterprise. (Just add a comment to blog entries if you want to learn more.)

These elements interlink. Some are digitally-driven where emerging technologies act as change agents. We’ve found that digital has significant impact for governance. Here are our preliminary GESCED themes for FISC and FMRT:

Governance Implications

(political & governance)

Economic Implications

(macroeconomic)

  • Economic Growth
  • Poverty Reduction
  • Globalization
    • Context: Economies are becoming more integrated. This integration disrupts vested interests, and can be to the detriment of the poor.
    • Digital Challenge: Protectionism restricts growth. Yet, there are losers in free trade.
    • Digital Opportunity: Globalization is a reality. Governments can use big data to track trade and growth. Investment in the right industries protects countries, and supports growth. Digital can help policy-makers to navigate the Atlas of Economic Complexity.
  • Gig Economy digitally-driven
    • Context: There is an increase in employment in the so-called “gig economy” that includes freelancing and the use of “platforms” such as Uber and AirBNB.
    • Digital Challenge: Negative characteristics of the current gig or “platform economy” providers includes low pay, poor job security, limited job benefits, tax avoidance, and the use of technology to skirt legal requirements such the Uber Greyball program. Meanwhile, established business that pay taxes and provide benefits are at a disadvantage.
    • Digital Opportunity: The gig economy is an opportunity for governments to support innovation that improves economic value, and reduces waste through sharing. Data-driven policy can inform regulation to create the optimal level of social support.
  • Cryptocurrencies digitally-driven
    • Context: Bitcoin and other cryptocurrencies using blockchain technologies, in a peer-to-peer basis, promises to reduce transaction costs while functioning without the need for central trusted authorities like financial institutions. The recent financial crisis showed that many financial institutions were not trustworthy.
    • Digital Challenge: Cryptocurrencies are often used for illegal activities. Investors using Initial Coin Offerings (ICO) skirt securities law. Exchanges have proven susceptible to failure. Transaction costs have not been eliminated. Wild speculation on cryptocurrencies makes for economic uncertainty.
    • Digital Opportunity: There’s more to blockchain and distributed ledgers than cryptocurrencies. Experiments show how blockchain technology can be leveraged for smart contracts, remittances, international aid, and copyright protection. Most importantly, blockchain can act as a major anti-corruption mechanism through transaction immutability.
  • Industry 4.0 digitally-driven
    • Context: The combination of  “cyber-physical systems, the Internet of things, cloud computing and cognitive computing,” promises unprecedented industrial and manufacturing productivity.
    • Digital Challenge: Analysts differ in their assessment of Industry 4.0 effects. Some see massive unemployment, while others see job shifts with net increases in jobs. The challenge to governments is far greater. It is clear that new digital skills are needed where current educational curricula have become out-of-date. The use of artificial intelligence, robotics and 3D printing overcome labour arbitrage creating massive unemployment in countries with low-cost workforces.
    • Digital Opportunity: Governments can fund industry 4.0 investments, and leverage digital for workforce capacity building.
  • Urbanization

Social and Cultural Implications

Environmental Implications

(environmental sustainability)

Policy-makers use the GESCED to SDGs alignment in long-term planning and program prioritization.

SDGs Linkage

 

 

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Doug Hadden

Doug Hadden

Executive Vice President, Innovation at FreeBalance
Doug is responsible for identifying new global markets, new technologies and trends, and new and enhanced internal processes. Doug leads a cross-functional international team that is responsible for developing product prototypes and innovative go-to-market strategies.

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