Should government leave innovation to the private sector?

by Rebecca King*

It’s no secret that modern society esteems technology leaders as celebrities. They are the visionaries that civilization rewards for questioning the status quo and setting bold new agendas. Some on their ambitions reach even beyond our planet. At a macro-level, their innovations are core drivers of increased productivity and, subsequently, higher standards of living. Unfortunately, some of these innovators appear to be held back by government bureaucracy - or that is the ongoing narrative.

Governments often finds itself on the back foot when it comes to innovation, especially when market competition and consumer protection is tested by technological growth. Governments do play a vital role in process, however. They not only direct the development of new technologies through government-supported programmes, but create environments for innovation. Strengthening the government’s position requires both technological innovation and, more importantly, policy innovation.

Policy innovation explained—the risks and rewards

Policy innovation is the development of new processes, measures, tools, and practices that result in an improved ability for governments to meet their objectives and solve complex problems. Agile Governance is one such new example of innovative policymaking. It comprises a suite of techniques that aim to increase the flexibility and adaptability of the government as it responds to changing technological conditions. These techniques include experimentation, sandboxing, outcome-based regulations, and public co-creation.

Governments are often considered pillars of stability for the private sector. Rarely would government be considered innovative. Any experimentation or dynamic policy structure risks undermining that certainty. If implemented poorly, government innovation can lead to less private-sector innovation. A lack of confidence in market conditions – from regular changes to the regulatory system – could result in a reduction of investment in private sector innovation.

However, if done well, private companies would have more opportunities to test and refine their products in a safe but realistic environment. At the same time, the government can develop policies and regulations to protect consumers and align them with private interests.

The government’s role in advancing innovation

It is critical to ensure best practice innovation by the government and advance this agility in a coordinated manner so that government flexibility does not come at the cost of market confidence. In the past 18 months, Agile Nations – a network of seven countries – has successfully fostered international cooperation through agile governance in 10 different projects.

Thanks to this success, the Experimental Approaches Project has identified innovation-friendly regulations from Agile Nations members to enable safe, open experimentation of new technologies.

The goal is to facilitate more best practice innovative policy environments, such as sandboxes and scale boxes, and empower start-ups and businesses to test, develop and launch new technologies and business models.

Additionally, Agile Nations are streamlining complex and duplicative processes to lift businesses’ burdens through their Consumer Connected Products project. Countries like the UK, Singapore, and Canada are collaborating to unlock the benefits that IoT possesses to minimise risks to the private sector in a coordinated fashion.

Balancing transformation and stability

At the World Government Summit, the UAE (who will supersede the UK as Chairmanship of the Agile Nations in April), convened some 50 leaders to discuss the delicate balance between agile transformation and stability.

According to these leaders, the most critical challenges include the need for sufficient skills and digital fluency in the public sector and coordination across regions and borders. Ultimately, the government should transform to preserve the principles and values for which it stands.

As the UAE takes the up reins of Agile Nations, innovation remains as the core mandate. Governments must continue to redefine their roles through experimentation. Innovations like the Metaverse are coming from the private sector. In like standing, governments must play an active role in shaping such emerging digital assets.

However unlikely it is that these policy entrepreneurs will reach the cult status of our modern technology leaders, productive and responsible innovation is no less reliant on public sector pioneers.

*Engagement Lead, World Economic Forum

**first published in: www.weforum.org