UCL Institute for Innovation and Public Purpose


Innovation and digital transformation in government

This project, funded by the Estonian Academy of Sciences and headed by Rainer Kattel, explores dynamic capacities and digital transformation in the public sector.

Computer screens, city, binary code

10 October 2017

Many countries are seeking to transform their public organisations and services through digital innovation. This project explores how can we ensure this digital transformation is inclusive, transparent and results in real improvements to services.

Policy context

Tim O’Reilly famously argued that “Government 2.0 is not a new kind of government; it is government stripped down to its core, rediscovered and reimagined as if for the first time.” O’Reilly’s vision and his concept of Government-as-a-Platform suggests that the new digital world has the potential to transform what government is and does.

However, the reality is quite different. As Barack Obama said, “We live and do business in the Information Age, but the last major reorganisation of the government happened in the age of black-and-white TV”.

Policymakers currently lack a clear understanding of what the digital transformation of the public sector can look like, what its key characteristics and drivers are. Furthermore, such transformation requires a better understanding of dynamic capacities inside public institutions. While in terms of theoretical foundations, methodological soundness and empirical validation there are plenty of studies of how dynamic capacities evolve in the business sector, there is very little solid research and discussion on how public organisations develop and sustain dynamic capacities. Indeed, new public management (NPM) has made many policymakers more fearful of government failures than market failures.

In governance and public management, waves of new public management reforms in 1980s and 1990s hollowed out capacity in public organisations through misguided reforms (e.g., massive outsourcing of technical expertise). Subsequent attempts to create alternative conceptual frameworks for public management reforms (e.g., new public governance) have failed to deliver a viable concept of dynamic capacities in public organisations. 

Similarly, most existing studies treat public sector innovation as a poorer, younger sibling of business innovations: public sector should simply emulate best business practices. Public sector innovation is, in other words, seen as a panacea, to paraphrase Charles Goodsell, to ‘metaphysical’ ineffectiveness associated with the public sector.

The concept of innovation, however, has political origins - from Machiavelli’s writings to de Tocqueville and Weber - a heritage almost completely lost in current debates. There is essentially no mention of power, legitimacy, public value or trust in current public sector innovation discourse.

Accordingly, today’s discussions around public sector innovation rarely touch upon fundamental issues facing governments such as how to deal with sharing economy giants like UBER and airbnb or how and why should public services be transformed by digital technologies.

Public sector innovation has been fundamentally misunderstood to be mostly about efficiency.

Research focus

This project aims to show that public sector innovation is a phenomenon sui generis and should be studied and promoted as such. The project aims to create sound theoretical and empirical foundations for understanding dynamic capacities in the public sector. The project synthesizes various strands of academic research (business innovations, public sector innovation, history of political thought) and results in original empirical research on emerging public sector innovation labs and government digital services around the world, on government ICT platforms, agile development in public sector and predictive governance.

Read more about our Governance and Digital Transformation research stream.

Further reading

Piret Tõnurist, Rainer Kattel and Veiko Lember (2017). “Innovation Labs in the Public Sector: what they are and what they do?Public Management Review, 19, 10, 1455-1479.

Veiko Lember, Rainer Kattel and Piret Tõnurist (2017). "Technological Capacity in the Public Sector: The Case of Estonia", UCL Institute for Innovation and Public Purpose Working Paper 2017-03.

Erkki Karo and Rainer Kattel (2018). "Innovation and the State: Towards an Evolutionary Theory of Policy Capacity." In: Wu X., Howlett M., Ramesh M. (eds). Policy Capacity and Governance. Studies in the Political Economy of Public Policy. Palgrave Macmillan, Cham.