In “Public sector, disrupted”, a recent study published by Deloitte, a question is asked: why do organizations in the private sector offer higher quality services or products for a cheaper price, while organizations in the public sector do the exact opposite?
The answer: governments do not partake in what is called “disruptive innovation” – which is to say, they continue to offer the same services at an increasing cost, rather than an improved product at a decreasing cost. Disruptive innovation is usually seen in consumer markets; for example, when a laptop first hits the shelves, it will often be riddled with hardware faults, but as the manufacturer slowly works out those issues, the price will drop.
So why do private companies succeed in this area while the public sector does not? Is it even possible for the public sector to innovate in such a way?
Deloitte’s report would suggest that it is. The government has tremendous buying power in so many markets: education, infrastructure, health care, the military. As such, the government can shape those markets by figuring out how to break the trade-off between cost and service in any given area.
This can be achieved by taking advantage of all the technological advancements we have available to us today. The internet can be used to give more people cheaper and easier access to higher education. Tracking devices can help reduce costs associated with jailing criminals by placing low-level offenders under house arrest instead of in prison.
It is all a matter of using technology to find non-traditional solutions to problems, or non-traditional models for service delivery that can simultaneously cut costs and increase efficiency.
What are your thoughts on this type of innovation? Does it resonate with your work experience? Let us know in the comments.