This research project is led by the UCL Institute for Innovation and Public Purpose (UCL IIPP).
Explore all IIPP research projects here.
Dates of the project: 2017
The Challenge
Governments are under pressure to modernise through digital innovation, but these efforts often lack clarity, inclusivity, and impact. Too often, innovation is reduced to efficiency gains, overlooking deeper issues such as legitimacy, trust, and public value.
Reforms inspired by New Public Management weakened public institutions by outsourcing expertise and prioritising market-style efficiency. Later attempts to replace these frameworks have not fully addressed how governments can develop the internal capacities needed for lasting digital transformation.
Public sector innovation continues to be framed as a lesser version of business innovation, narrowly focused on efficiency. This perspective misses its political roots and neglects key questions about power, legitimacy, and public value—leaving governments poorly equipped to respond to challenges such as digital sovereignty, platform economies, and the future of public services.
Our Approach
At IIPP, we are exploring how governments can build the dynamic capabilities required for meaningful digital transformation. Led by Rainer Kattel and funded by the Estonian Academy of Sciences, our research combines theoretical and empirical work on:
- Innovation labs
- Digital services
- ICT platforms
- Agile practices
We treat public sector innovation as a distinct field—not a copy of private-sector models. By analysing both successes and shortcomings in government reforms, we aim to provide policymakers with tools to rethink capacity-building and move beyond outdated frameworks.
Why This Matters
Digital transformation should not be limited to streamlining processes. Done well, it can empower governments to deliver services that are fairer, more transparent, and more inclusive.
By reframing public sector innovation as a driver of legitimacy and public value—not just efficiency—this project helps policymakers and institutions strengthen their capacity to respond to societal challenges. It also contributes to debates on how governments can retain sovereignty and build trusted, future-ready systems in an increasingly digital world.
Resources
Video: Beyond the Chainsaw Rethinking Efficiency in Government
Speakers: Mariana Mazzucato, Yamini Aiyar, Rohit Chopra, Elizabeth Linos, Damon Silvers and Josh Entsminger.
Description: This panel explores new frameworks for rethinking efficiency in public service amid AI and automation, challenging austerity-driven narratives and highlighting alternatives that align with public value.
Video: Digital Sovereignty for people and the planet: how to get there?
Description: A debate on the realism and priorities of digital sovereignty agendas, exploring how governments can reclaim control over technology amid Big Tech dominance and geopolitical tensions.
Video: Digital state capacity and grand challenges
Description: This session explores mission-oriented policies in Europe as a framework for public sector reform, highlighting new opportunities to build state capacity in the digital era.
EuroStack – A European Alternative for Digital Sovereignty
https://www.ucl.ac.uk/bartlett/publications/2025/feb/eurostack-european-alternative-digital-sovereignty
The Economics of Shared Digital Infrastructures
https://www.ucl.ac.uk/bartlett/publications/2025/mar/economics-shared-digital-infrastructures
Leveraging digital public infrastructures for the common good
https://www.ucl.ac.uk/bartlett/publications/2024/nov/leveraging-digital-public-infrastructures-common-good
Digital Public Infrastructure and Public Value: What is ‘public’ about DPI?
https://www.ucl.ac.uk/bartlett/publications/2024/mar/digital-public-infrastructure-and-public-value-what-public-about-dpi
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. http://www.tandfonline.com/doi/full/10.1080/14719037.2017.1287939
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. https://www.ucl.ac.uk/bartlett/publications/2017/oct/technological-capacity-public-sector-case-estonia
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. https://link.springer.com/chapter/10.1007/978-3-319-54675-9_6
Funder
This project is funded by Estonian Academy of Sciences.
This research project is led by the UCL Institute for Innovation and Public Purpose (UCL IIPP).
Explore all IIPP research projects here.
Contact
UCL IIPP Co-Deputy Director and Professor of Innovation and Public Governance
Click to email. r.kattel@ucl.ac.uk


