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23.08.17

Transforming services, data and organisations

Source: PSE Aug/Sept 2017

Taking digital government to the next level requires strong leadership from everyone in the sector, argues Daniel Thornton, programme director at the Institute for Government.

Today the four most valuable companies in the world are digital businesses. Five years ago, only one was digital – the rest were oil and investment companies. There have been big changes in the private sector, but the public sector has changed less.

As I argue in my recent report, ‘Making a Success of Digital Government’, the digital businesses have platforms which benefit from three main things:

  • Economies of scale in supply, so the Facebook website and the Google search engine can be used by everyone connected to the internet – more than half the world’s population
  • Economies of scale in demand (also known as the network effect), so that the more people that use a service like Facebook, or review products they buy on Amazon, the more valuable it becomes to other people. Around the platform, there is a swarm of services provided by third parties – the Apple Store, or the programs that run on Microsoft’s Windows. These services connect to the platform using standard connections – Application Programming Interfaces (APIs), which protects people’s data, and means that people will use the main platform more
  • The organisations that run the platforms have structured themselves to be open to innovation. For example, recognising that hierarchies stop innovation, Amazon keeps teams small (so-called ‘two pizza teams’ – small enough to be fed with two pizzas). These teams interface with each other using private APIs so services are transparent and transaction costs are lower, and they provide their services outside as well as inside Amazon so that they stay in touch with the market

The public sector can learn from all three of these.

Most progress has been made on the first. GOV.UK has consolidated central government websites in the UK, providing a consistent, easy-to-use interface, so it is now much easier to renew your driving licence or apply for a benefit. NHS Direct provides a reliable and accessible advice service for people concerned about their health. Some local governments have also improved their digital services.

There is less progress in using the network effect. The Government Digital Service has created a digital marketplace, which brings together 3,300 suppliers with a large number of public sector customers. But take-up has been slow outside central government, and even here, 94% of contracts are still with large companies.

As well as providing health advice, NHS Direct allows people to post feedback on health services. One hospital, St George’s in south London, has around 700,000 patients a year, and around 200 comments from patients. With so few people posting reviews, feedback is not going to be useful to the hospital. Like the private sector platforms, NHS Direct should not try to build all the services itself. It should explore making it easy to post comments on health services on platforms that people use frequently.

Least progress has been made in opening public sector organisations to innovation. Digital teams have started to work in new ways – for example by using Agile project methods, and adopting standards that put citizens and users at the centre of their work. But large parts of the public sector work in ways that have not fundamentally changed for years. Hierarchies have remained largely in place, with eight or 10 grades in the Civil Service. There are large numbers of people whose permission is required before a change can be introduced. There has been progress in providing public sector employees with better tools to do their jobs, but communication within and between departments is still patchy – teams often share data with each other by sending spreadsheets attached to email.

Public sector leaders need to educate themselves in the new technology and new ways of working. It should be as unacceptable to say “I don’t understand digital” as it is to say “I don’t understand finance”. Digital cannot be the preserve of geeks – it is a core way of managing public sector organisations, and one where people need to keep learning throughout their lives as the technology changes so fast. Having understood how private sector platforms have been successful, public sector leaders need to start applying the lessons to public services, to save money and provide better services for citizens.

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