The internet is now rapidly moving into its third and possibly most radical phase, where we are seeing massive platforms emerge, define and drive the architecture and strategic direction of the digital revolution.
Examples include Amazon’s ginormous server farm which powers many of the world’s biggest sites, Google search platform which sorts and navigates the web and Facebook which hosts the world’s biggest community.
Simplistically the first phase of the Internet, was basic web publishing. The second was what many call Web 2.0, smarter interactive applications, most notably social media. The third phase is the arrival of large scale digital systems. These platforms are profoundly changing the very heart of our economies and societies.
At last week’s ANZSOG — Australia and New Zealand School of Government — conference, Boston Consulting Group’s Managing Director, Philip Evans, painted out the implications of this new stacked architecture of the web.
His recent paper, written with Sydney partner Patrick Forth, Borges’ map: Navigating a World of Digital Disruption is a must read for anyone wanting a strategic framework to think about how the next phase of digital is likely to play out.
While the paper’s focus is on business, it is equally relevant for government. If correct, it suggests a radically different role for government, both as a service provider and more profoundly for policy and regulation.
Talking to Evans, he foresees large areas of our industrial economy moving to platforms — health (universal genome maps), education (mass learning platforms) and energy (smart grids), to name but three.
Communications and media are early exemplars of the shift. Powerful mass instant messaging platforms are fast destroying the lucrative SMS businesses of the carriers. As they extend their offers into voice, they will start to challenge telcos’ traditional roles, and with it make a mockery of the pillars of the regulatory systems that underpin numbering, privacy and quality assurance. Global programmatic advertising is doing the same to traditional media, with Google now easily the biggest media player in the country, and not a journalist to be seen.
Many of these platform-threatened economic activities are managed or regulated by government, putting the public sector very much in the eye of the digital storm. Typically these platforms are global in scale, which particularly challenges mid-sized oligopolistic economies like Australia. The speed at which the car-sharing app Uber is revolutionising the taxi industry is but one example where both industry and regulators are being severely questioned by new platforms.
This platform view has deep implications for how we design policy. Many of our governmental, industry and economic institutions are framed around traditional linear industry verticals, often heavily concentrated in the hands of a few players. In a platform world the perspective is a horizontal, building whole economies on top of the platform and regulating accordingly. That is totally different to today’s prevailing philosophy, which seeks to stop or reduce poor behaviour and outcomes through a traditional linear supply-chain lens.
What role for government?
Government is both a steward of this new system and a potential provider/player. As a player, Evans says the critical issue is to understand what part of the stack government wants to play on.
The top of the stack is where the innovation happens, on devices and apps. In the middle are aggregated communities, Wikipedia, Airbnb and Apple’s app developers. At the base are the big platform players, utility in character, ruthlessly upgrading their core features, building massive networks, which the upper sections of the stack play on.
Government has the capacity and scale to be natural players at the platform level, but this requires a very different view of how agencies currently think about their role.
Data as infrastructure
The resource government commands in the new order is data. Evans describes data as infrastructure, “a long-lived asset, general in purpose, capital intensive, and supporting multiple activities.”
With the amount of data now doubling each year and BCG predicting the number of sensors collecting data (AKA the internet of things) to rise to about 50 billion worldwide by 2020, we are fast reaching a point where we will have a near-perfect map of humanity.
This is why Evans sees data as an existential phenomenon, pixels which map our lives in multiple ways, and which can now be used to promote better public purpose. He uses the example of genome mapping and the likelihood that for as little as $100, we will soon be able to order our complete DNA map. Rather than old-school clinical diagnostic approaches, new medicine will start from a rich and personalised view of our own biology.
In the same way that this changes the very basis of medicine, public agencies will become much more akin to knowledge centres — built on stockpiles of data — than operational organisations.
Evans uses the example of the national post office. The post office has a database of everyone’s address, something no other organisation has, which is of enormous value for so many providers. Rather than conceiving itself as a delivery and fulfilment agency, a post office can rightly have the ambition to be a powerful platform player using this data.
And in this model, if well designed and regulated, the platform can host a hugely vibrant ecosystem of providers and entrepreneurs looking to service citizens and consumers.
This utility model lets government do the heavy lifting around data collection and assurance and has it pull back from being an actual front-end provider.
To take an example: the Bureau of Meteorology stops predicting the weather and instead sets itself up to be a provider of data to modellers, forecasters and application developers, who have a far more acute sense of the needs of industry and consumers.
Evans reminded the conference to consider international as a layer of government. In the BOM case, this would ask if we would be better off leaving it to the big international players such as the well resourced US National Oceanic and Atmospheric Administration, with its flotilla of satellites and bevy of sophisticated models — some would say far superior to anything the BOM can do.
Radical change, but the type of deep thinking that needs to be permeating the upper levels of Australia’s public sector and its academic practitioners, in my opinion.
Time for a systemic view
While there is a general instinct that using big data sets can transform many aspects of government — healthcare being an obvious area — there appears to be little idea of how to think about this at a systemic level.
The open data movement is doing good work collecting data into the big data portals, but so far it feels much more like a Field of Dreams approach, rather than a deeper systemic and strategic rethink of how government operates in this new order where data is supreme.
Part of this is a capability question. The chief executive of the South Australian Premier’s Department, Kym Winter-Dewhirst, told the ANZSOG conference that when he moved from BHP to take up his new role, he was shocked at how little data was used to guide decisions. He said at BHP data was religiously collected and rigorously applied. In government, with only a few exceptions, decision-making is still largely instinctive.
It is also an organisational challenge. New Zealand is well ahead of Australia in its digital play. Colin Mackenzie, the CIO for New Zealand and CEO for the NZ Department of Internal Affairs, told attendees that agencies have to begin to work differently, to see themselves as a system of services, rather than a whole set of point solutions.
In Canberra the Department of Human Services is very much leading this sort of thinking around its replacement of the welfare payments platform. The system pays out over $100 billion a year to more than 7 million people and is based on early ’80s technology. Tam Shepherd, the executive director for the welfare payment infrastructure transformation (WPIT) programme, said the new platform will be capable of handling payments across all tiers of government and could also be used by NGOs who needed a payment system.
The same functional collaboration needs to extend to the data world. Former Canberra mandarin and now secretary for the NSW Department of Premier and Cabinet, Blair Comley, said in his experience agency leaders were generally very willing to share data. Comley is no dummy and said while agencies were comfortable using and releasing data around service delivery, they were more reluctant to share information externally at the early stage of policy development.
This suggests a more transactional view of data, whereas Evans is provoking us all to take a far more strategic approach.
The shift to a data-driven, platform-designed world will take a shift in public sector investment, from agencies to systems, and a set of new agencies with a mandate to drive the all-of-government approach required.
Service NSW was set up as a new system-wide agency and already has brought over 400 different processes together. The new Federal Digital Transformation Office got its $250 million from five other agencies, forcing them to collaborate around identification and authentication.
Time will tell how effective these early examples of collaboration and co-design will be, but the real challenge is having the intellectual strength and modernity among our senior public sector executives and academics to rethink the government model for the digital era.