Government needs to shift from being a transformation laggard to being a catalyst for change. This requires agencies to change how they consider risk and an appreciation of the leadership role government can take in the broader economy, to fuel innovation and economic development in the digital era.
From drones capable of rescuing people, to machine-to-machine communication and Artificial Intelligence, the way in which we interact with technology is changing rapidly. However, fear of failure is inhibiting innovation at every level of the Australian government, according to a recent panel of speakers at the Innovation and Risk: Finding Balance in the Digital Era workshop on 23 January 2018.
The event, which was hosted by Optus business director public sector strategy and innovation, Sam Kennedy, featured presentations on the politics of innovation and ways of managing risk in digital investments from former Victorian departmental secretary, Adam Fennessy, before accepting a position with consulting firm EY, Dr Malcolm Thatcher, CEO and founder of Strategance Group, and Harm Ellens, a customer experience transformation consultant at Optus.
During group discussions, both the panel and attendees agreed that if government agencies are ever going to have the confidence to invest in digital projects that will provide value to the community and drive economic growth, they need to change the narrative around “risk” and “failure”.
The seminar came on the eve of the release of a major official paper called Australia 2030: Prosperity through Innovation (the 2030 Plan). Published by Innovation and Science Australia (ISA), the report makes 30 recommendations to the Australian Government, actionable within five core policy imperatives for: education; industry; government; research and development; and culture and ambition.
The report was chaired by well-respected venture capitalist, Bill Ferris, and specifically challenges governments to be bolder in using innovation to unlock economic and social opportunity for the future.
During his presentation, Fennessy told the workshop some high-profile IT and ICT “disasters” – including the first few, news-grabbing years of Victoria’s Myki electronic transit ticketing system – have made governments more risk averse at an every level when it comes to digital investments — and that this is preventing them from providing citizens with the same level of online service offered by the private sector.
He cited statistics from the EY Digital Australia: State of the Nation 2017 report, which states that 87% of surveyed respondents had accessed a government service online in the previous 12 months and that the overall satisfaction rating, based on aggregated feedback across 14 different departments and sectors, of these experiences was just 60%.
It’s the government’s responsibility to not only promote and fund digital investment, but to lead by example, Fennessy argued. Being “innovative” means being open to making mistakes, in order to learn from what didn’t work and build on what did.
The only way of eschewing risk entirely is to never attempt anything new — and this carries its own inherent risks in terms of obsolete systems and processes, inefficiencies and vulnerabilities. Government should be leading the charge in the digital revolution, not limping along behind it – particularly if it wants to realise its vision, as identified in the Global Innovation Strategy, of building an economy driven by innovation and entrepreneurship.
So, since failure is unavoidable when developing and rolling out new IT and ICT systems, it should be considered an investment in knowledge and an opportunity to improve and achieve better outcomes.
A fear of negative responses from the public is understandable, but the trade-off of risk is the potential for great reward, and not to help remind people of that the government needs to get better at sharing the success stories.
The Australian Taxation Office (ATO) was used as an example of excellence several times by speakers and attendees, both for its current online service offering and its continued efforts towards updating and streamlining that system. The objective, according to Ellens, who works with the ATO in his role at Optus, is for the vast majority of taxpayers to be able to lodge their returns in less than five minutes, with fewer than five mouse-clicks by 2020.
Optus provides internal networking infrastructure for the ATO’s contact centre – the third largest in Australia – including managing the telephony systems, SMS gateways, push-button IVR systems, voice biometrics, chat sessions, and screen-sharing for around 3600 contact-centre agents. The ATO also uses Optus when faced with requests to support other government agencies during high-volume or one-off events.
Describing the government agency as one of Optus’ most innovative customers, Ellens said it works to secure and guarantee a good user experience even when its system is under load by using unique technology that simulates real calls between real people, using real CRMs and real databases, to work out where bottlenecks might be.
By having a thorough understanding of its limitations, the ATO can determine a best course of action should there be a sudden spike in call volume beyond what it can handle, thereby mitigating the risk to its operations.
The ATO was cited in the Ferris innovation report for its use of advanced data analytics to identify error fraud, an initiative that has already generated $500 million in savings.
The Ferris report calls for Government to embrace a series of “national missions” including one focussed on making Australia the healthiest nation in the world by applying genomics and precision data medical approaches.
Better use of open data was one of five key recommendations by the ISA for government to catalyse innovation. Arguing the structure of the Australian government and its public service reflects the needs of government in the 1980s, not the 2000s, the Ferris report also called for federal, state and local governments to embrace pro-innovation policy and regulation, encourage social investment, use procurement to drive and underwrite innovation and improve service delivery through digital approaches.
Understanding the risks
Investment in digital is a core assumption of the ISA 2030 plan, making it imperative for agencies to have a robust approach to managing risk. The workshop heard the key to investing in digital is to understand and rate all of the “undesirable” outcomes that might eventuate from a certain course of action, and then to decide at which point the adverse consequences are unacceptable.
Dr Thatcher called this identifying your “appetite for risk” and said it allows organisations to determine the pace of innovation they can comfortably sustain.
He told the workshop that in his experience, the main contributors to digital investment failure (apart from an underinvestment in understanding and using data) are a fundamental lack of:
Clarity – in the complex architecture of ICT systems, the path to digitisation, and the role of leaders in digital transformation;
Leadership and accountability – in enterprise-thinking, decision-making, and project delivery;
Focus – on people and processes, outcomes and benefits and managing risk; and
Tenacity – in portfolio management, continuous improvement and benchmarking your performance.
He also outlined a number of other factors that give specifically give rise to digital risk in the public sector, including:
- The social contract. Citizens want innovative solutions from government, but are not comfortable with rapid change, and it’s critical for public sector initiatives to adhere to the social contract that governments have with citizens, Dr Thatcher told the group. The community will generally consent to a reduction in civil liberties in exchange for public safety and an ordered society, however the pace of change in government should never jeopardise the public faith in governments to keep order.
- Statutory/regulatory/compliance issues. Investments driven by compliance pressures should follow the same rigorous governance and risk processes as other investments – be wary of shortcuts.
- A lack of maturity among digital solution vendors. Some solution vendors may not be able to expertly implement their solutions, so appropriate due diligence is essential.
- Privacy issues. Current regulatory and legislative controls surrounding privacy are very restrictive and need to be updated to support innovation in the digital age.
- Inadequate technology infrastructure. Reliability issues can affect credibility and, in some cases, may breach the social contract when major government systems fail.
- Problems with organisational change management. Innovation goes hand-in-hand with change, which can create a lot of resistance. People will naturally want to know how they will be affected.
- A lack of sustainability. Are there support mechanisms in place to help ensure the project’s long-term viability once it reaches the implementation phase? For example, have sufficient resources been allocated to monitor and respond to social media pages?
Dr Thatcher told the workshop that innovation in government requires a clear vision and a flexible plan, with a focus on small projects and how to leverage existing assets.
He also encouraged collaborations, partnerships, think-tanks and other formal structures, which manage risk through the sharing of knowledge and expertise.
These tactics are not dissimilar to those set out in the Global Innovation Strategy, which champions whole-of-government engagement and the sharing of knowledge and technology infrastructure.
However, as Fennessy pointed out, there is sometimes a gap between intention and action in the public sector, and the latter is crucial for any government that wants to be at the forefront of digital development.
Capturing hearts and minds
New IT is always disruptive, Dr Thatcher told the workshop. People facing it can run the gamut of emotions outlined in Elisabeth Kübler-Ross’ five stages of grief: denial, anger, bargaining, depression and acceptance.
Since change can be difficult or fearsome for some people — and the attitudes of staff, consumers and citizens can have such a significant impact on large IT investment projects — managing these people risks is an essential part of the digital transformation process, he said.
The group discussed the need for governments to create a strong culture of change by having open conversations with the public and by finding topics that capture hearts and minds.
The benefit of this citizen-centric approach is that it increases community engagement and can be a way of navigating politically sensitive issues, Fennessy said, giving the example of the Great Koala Count app, a government innovation sparked by the need to relocate large numbers of koalas, which had gotten into plantations in south-west Victoria.
Instead of sending out officials with clipboards to count koalas in the area, they asked citizens to start snapping photos on their smart phones.
Because the images were geo-located, this led to much more accurate data on koala numbers and locations, according to Fennessy, which helped inform the best way to care for them.
Most importantly, the community understood what was happening and why, and was engaged and on board with the process.
The digital age has only just started and more disruptors are on the way, the workshop heard. To make the most of the opportunities offered by these new technologies, our government and society in general needs to be more encouraging of investments in this field and learn to take failure in its stride.
By increasing community engagement and keeping people informed, the public sector can help manage some of the risks associated with citizen expectations and attitudes, make us more adaptable, and create a strong change culture that supports and facilitates innovation at every level.