The public sector is risk averse and allergic to innovation. At least, this is what we’re often told. It is frequently compared to a daredevil private sector; a place peopled by savvy entrepreneurs willing to risk it all to be top of their field. The public sector, on the other hand, is said to be managed by cautious boxticking types, too busy wringing their hands to innovate.
These are, of course, caricatures. Life in the private sector is probably not quite as it’s portrayed in the 1987 movie Wall Street and the public sector is certainly not run by dull jobsworths clinging to their sinecures. The reality is more complex. But there are cultural differences between the respective sectors and so I approached two representatives of each to tell me more.
Charles Mindenhall, co-founder of the digital transformation specialist Agilisys, started me thinking about this at the launch of State of the Digital Nation. The report had found more than 50% of the 400 individuals approached claimed that existing processes were preventing digital adoption. And this - contrary to the what the caricature of the private sector would have you believe - was the case for both public and private organisations.
But Mr Mindenhall still highlighted what he saw as a risk-averse culture in local government. Councils, he told the audience, were ‘afraid of failure’. I spoke to him later to find out what he meant. Local authorities can be like any large organisation, he explained. ‘They often find it quite difficult to innovate because they’re perfecting an existing model they’ve been operating - and often operating successfully - for a while.’
He used the retail industry to elaborate. ‘Say you’re M&S, you already have a big customer base, you just want to make sure you get next seasons fashions and you want to manage your inventory a bit better. You’re just constantly tweaking and refining an existing model.’
These large companies lumber on without risking what they have with systemic and disruptive change. Amazon, by contrast, was more experimental when it started out. It took risks. It wasn’t afraid to fail. And now it’s one of the largest companies in the world.
For Mr Mindenhall councils are more like M&S rather than a youthful Amazon because they are ‘afraid to fail’. They adjust their preexisting formulas rather than attempt to rewrite them and start from scratch.
He acknowledges they have statutory duties and are operating with public money. But he stresses that large-scale problems such as the social care crisis cannot be overcome without large-scale change.
And this is where a culture of experimentation and innovation are required. Pilots are all very well, but without an innovative culture they simply continue the business-as-usual, incremental-change approach. ‘I’m not saying take unnecessary risks,’ he says. ‘I’m not saying take risks that will jeopardise the whole authority. But too often I think people assume risk is something to be avoided at all costs.’
I got a response from Zena Cooke, the corporate director of resources at Tower Hamlets who was at the launch of Agilisys’ report. Ms Cooke took issue with Mr Mindenhall’s claim councils were ‘afraid to fail’ at the time and provided me with a more indepth rebuttal afterwards.
She began by emphasising that councils were a ‘diverse group…with varying corporate cultures, and varying approaches to risk.’ But she stressed that radical changes were always done in the ‘public spotlight’.
‘The merits of “innovation for its own sake” make an uncomfortable and difficult message for residents if services are affected or council tax payers see funds wasted,’ she says. ‘Ultimately, voters will decide how worthwhile such innovation is.’
Councils need to innovate and embrace technological change, she admits. But failure can have ‘real consequences for individual service users, who are often the most vulnerable members of society’. She adds: ‘We’re not in the business of risk taking for effect, or to turn a profit, as companies like Amazon are.’
She acknowledges that, as Mr Mindenhall points out, councils prefer incremental change; evolution rather than revolution. But she says this approach allows authorities to identify and tackle problems before they cause harm. Councils ‘manage rather than avoid risk’ due to the scale of the service and financial challenges they are facing.
From the outside it may look as though the public sector is a behemoth which refuses to change. In reality, however, its responsibilities are different to that of a company. Amazon fails and people lose their jobs. Councils fail and people lose their lives. Failure is a serious business in the public sector and cannot be taken lightly.
Still, councils could learn from Mr Mindenhall’s advice. There is always a certain amount of failure and so the crucial point is how to react to it. You can move on quickly making a mental note to steer clear of experimentation. Or you can learn how to do it better next time. The choice is yours.