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Never too big to fail? What are the implications for Government IT


October 3, 2011

Doug Hadden, VP Products

IT cartels, IT innovation, and “metamovements.” What do these have in common? What does it have to do with Government information technology?

Strategic Inflection Point

I believe that this represents a “strategic inflection point” for Government IT. The same kind of strategic inflection point described by Andrew Grove when Chairman of the Board for Intel:

They represent, in my description of it, what happens to a business when a major change takes place in its competitive environment. A major change due to introduction of new technologies. A major change due to the introduction of a different regulatory environment. The major change can be simply a change in the customers’ values, a change in what customers prefer. … But what is common to all of them and what is key is that they require a fundamental change in business strategy, and that’s almost a definition of a Strategic Inflection Point. A Strategic Inflection Point is that which causes you to make a fundamental change in business strategy. Nothing less is sufficient.

This is a strategic inflection point for the way that governments manage information technology and the way in which software vendors support governments.

This “double dip” strategic inflection point is driven by:

  1. Innovation Necessity: Budget constraints at a time of citizens demanding improved government performance and transparency at lower cost.
  2. Value, Risk and Innovation Paradigm: Traditional methods to understand value have become obsolete in the age of social media.
  3. Digital Darwinism: IT agility challenges incumbent Government IT providers.

1. Innovation Necessity

John Suffolk, the former UK Government CIO, suggested that governments should not waste a good financial crisis. It’s not just about finding innovative ways to reduce IT costs.  This crisis has seen the rise of what Umair Haque, Director of the Havas Media Lab and founder of  Bubblegeneration, calls the Metamovement:

The Metamovement is a movement of movements. Not all these movements are similar; no two are exactly like; each can be readily distinguished from the next. The Arab Spring is part of the Metamovement; the London Riots were part of the Metamovement; protests spreading across America, under the banner of Occupy Wall St, are all part of the Metamovement.

The Metamovement questions institutions. It demands a change in the status quo of how governments interact with citizens. This has a huge impact on policy and regulation. This is manifested in a demand for improved transparency through Government IT.

As Alex Howard of O’Reilly Radar has pointed out, recent cut-backs in the United States does not mean the death of open government.

Takeaway for Government IT: the government performance and transparency demand is a cornerstone of the Metamovement. Initiatives like the Open Government Partnership is likely the “end of the beginning” for open government data. IT information silos, proprietary technology and focus on IT “control” in government inhibit the ability for countries to respond effectively to citizen demands.

2. Value, Risk and Innovation Paradigm

Government IT decisions tend to be risk-adverse. Small steps are taken, primarily with incumbent software vendors. Yet, this can create an environment that limits innovation and cost savings through what former American Federal Government CIO Vivek Kundra calls “IT Cartels.”  This can result in attempting to find cost-savings through legacy technology“economies of scale” when  modern technology can generate technology can generate more agility while reducing costs and aligning performance with budgets.

As Harvard professor Clayton Christiensen has written, there are significant the differences between disruptive innovation and sustaining innovation. Successful leaders in any category, such as incumbent IT providers, are unlikely to challenge the status quo through disruptive innovation because it disrupts business models.

This fact is addressed in Geoffrey Moore’s new book, Escape Velocity: Free Your Company’s Future from the Pull of the Past. Moore, who developed the Crossing the Chasm technology analysis, addresses this lack of innovation among incumbents. As Mark McDonald of the Gartner Group summarizes:

Moore’s central premise in this well written, actionable and highly recommended book, is that companies have a structural bias for investing in things today that cause it to starve out the new products and services that will generate growth in the next 2 -3 years.

My sense is that this “starving out” reflects Government IT and incumbent vendor approaches to innovation.

Takeaway for Government IT: there needs to be a new approach to risk & results in increasingly transparent world. The Metamovement does not demand tweaking. It does not want a 10% improvement. Traditional approaches to risk in Government IT have become increasingly risky because it is almost certain that these approaches will not result in what citizens want.

3. Digital Darwinism

Brian Solis of Altimeter Group observes the change in the IT landscape. As he says in a blog entry promoting his upcoming book Digital Darwinism:

The reality is that we live and compete in a perpetual era of Digital Darwinism, the evolution of consumer behavior when society and technology evolve faster than our ability to adapt.

Nothing today is too big to fail nor too small to succeed. Disruption not only faces every business, its effects are already spreading through customer markets and the channels that influence decisions and behavior. What works against you also works for you. And, it is what you do now that defines your ability to compete for today and the future. You already recognize the importance technology plays in your business. That’s why you’re here. But recognizing the difference between emerging and disruptive technology and measuring its impact on your business, customer relationships, and products is a necessary discipline to successfully evolve.

Solis also connects the Metamovement with this change in IT in video trailer.

Kay Plantes from the Plantes Company describes some of the fundamental ways that the information age has transformed the economy. She describes the movement from closed to open markets where  “there was protection for leaders and leading products.” Plantes observes:

In this world, the old strategies of protecting positions through cost cutting, innovating products, branding and marketing just don’t cut it anymore.

Citizens are looking for what Ray Wang, founder and CEO of Constellation Research, calls the “consumerization of IT.” Wang points out that the CIO focus on safe and secure IT limits organizational effectiveness.

For the next generation of knowledge workers, entering the workplace often feels like entering a computer science museum

Takeaway for Government IT: There are significant limits to innovation among many Government IT providers. Make no mistake, governments will innovate the relationship with citizens. The key is that Information Technology should enable these changes. Old models, legacy technology can ensure that ‘big’ will fail.

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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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