It may seem obvious to embrace innovation – we are driven to explore and seek new ideas. Yet we are also creatures of habit and change that affects us personally can be threatening and stressful.
In an environment of increasing global competitiveness between countries, it will be those countries that embrace innovation that ultimately succeed. Embracing innovation requires tough decisions – for example the introduction of Uber has challenged many countries who seek to protect the existing taxi businesses.
Uber promises greater utilisation of assets by connecting supply and demand – a clear economic and social benefit. Yet there are challenges with maintaining quality and safety of transport services. The lesson to be learned though is not to legislate against Uber, but to embrace the innovation and seek to enforce quality and safety standards. Government then needs to deal with the social impact – which includes potential loss of livelihood for existing drivers and taxi companies, and the revenue risks of the gig-work employment model that is the foundation of Uber services.
The scale of change from innovation is potentially staggering – we are just starting to see the growth of the digital economy and gig-work. A recent study in the UK found a GBP50billion growth in the dark economy – most likely driven by an increase in gig-work and digital trade. The disruption to society is going to be significant and we are not really ready to manage the consequences.
Government has a special role to play in enabling innovation – many of the disruptions we are seeing will need government to sponsor, enable and govern the change. There are a few principles I would propose to embrace innovation:
- Never compromise on a good value proposition – there will always be factional pressures to protect segments yet the role of Government should be to embrace the value and develop ways to protect against the consequences.
- Create a culture of innovation – organizations use a variety of models to encourage innovation and some of this thinking can be applied at the nation level to encourage innovation. The essence being to provide a level of social protection together with rewards for those who are successful.
- Anticipate and manage social consequences – the one known with innovation and the business disruption is that it will be significant and continuous – and the role of Government will be to understand and manage the consequences. A key challenge is to create business agility.
- Invest in digital infrastructure – governments have traditionally been the drivers of infrastructure investments where the private sector is either unwilling or unable to drive investment (for example road/rail infrastructure and national broadband initiatives). We now need to invest in digital infrastructure that enables digital services – the digital roads.
The challenge for many governments is finding the talent that is capable of embracing change – traditional structures that focus on operational management of current legislation do not necessarily create the right leadership talent to manage innovation. The call to action will be to create structures and find talent that can specifically embrace innovation and disrupt existing models while retaining the safety and protection we expect from Government.