- IMD Business School

Public Sector and the Digital Vortex

How Government Organizations Can Harness Digital Disruption for Positive Change
28 pages
June 2017

Just as the private sector must transform to thrive in the Digital Vortex, so must public sector organizations. In truth, governments have been pursuing transformation for decades. In the Digital Vortex, the question becomes “how can digital disruption transform this transformation?” Public sector organizations must evolve to become digital platforms upon which legislation, regulation, services, and a renewed vision of government create the right competitive environment for constituents to realize the benefits of digital transformation.

Driving New Sources of Value in the Public Sector

Like the private sector, the public sector needs to emphasize value creation – cost value, experience value, and platform value – for its “customers,” rather than focusing on digital “tweaks” to its value chain. Unfortunately, most public sector “transformation” efforts to date have been almost wholly focused on incremental evolution of the service delivery value chain. Governments must take a new tack in the era of the Digital Vortex – by harnessing digital disruption to innovate their business models and deliver value to constituents in new ways (see M-PESA case study).

Building the Capabilities to Thrive: Digital Business Agility

To move with the speed, fluidity, and effectiveness of disruptors, a new approach is required for building organizations. This requires digital business agility, which draws upon three underlying competencies: hyperawareness, informed decision-making, and fast execution. Public sector organizations that possess strong digital business agility react quickly and effectively to changing economic and social challenges. They can sense real-time information about constituents and their environment (hyperawareness). They then process this information to determine how they can best meet the needs of their citizens (informed decision-making). And they move quickly to change course and apply resources (people and technology) where they’re needed most (fast execution).

Government as a Platform

Government has the power to shape disruption’s path – its actions are critically important to how digital disruption plays out, and the extent to which it serves growth and value creation. To strike the delicate balance between encouraging disruption (or reining it in) and channelling it for economic growth, governments should focus on four areas:

  1. Investing in innovators
  2. Building a talent pipeline
  3. Promoting “disruptor-friendly” regulation
  4. Using public assets to drive innovation.
Government as a platform image

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