Can Governments Innovate?

Governments can and should innovate. They just need to apply the right tools.

NASA has been in the news quite a bit recently, and as usual, with questions about the effectiveness of how they spend their money (for example, see the recent article about NASA’s now useless $349M rocket tower finished four years after the rocket it would host was canceled). Similar government gaffs abound, including the immense frustration around the launch of ObamaCare. As governments struggle with limited budgets, even an organization as large as NASA needs to think carefully about what innovation really means.

Although it may sound contradictory, we are huge fans of the power of government to innovate. The semiconductor industry has its roots in government spending around counter-electronic warfare, the internet has its roots in government spending around the ARPANET, and ironically, many modern technologies come from NASA’s early efforts in reaching the moon. We believe governments can innovate, but that there is a better way to reach these goals.

In our research about how to manage uncertainty, we studied innovation in different disciplines, such as engineering, entrepreneurship, computer science, and life sciences, as well as how people applied the innovation process to successfully innovate. We discovered some fascinating things. First, we found that innovation, across disciplines, tends to share a set of common steps (see my post about the research and The Innovator’s Method here). But just as important as the steps themselves, was speed. For example, Amazon.com takes the approach that if you can lower the cost of experimentation you can radically increase the number of innovations you create. How do you do this? Either design a simpler, cruder experiment to replace the expensive one or create a platform that allows you to experiment more quickly, like pharma starRegeneron has done by reducing the cost of launching a successful drug by 75 percent through better experimenting tools.  At the core, you are trying to learn quickly about the uncertainties you face. 

We learned something else that was surprising:  governments can apply the innovator’s method with similar positive results. For example, China has a long history of using experiments to test the uncertainty around key policies before trying to implement them. The most famous experiment was the creation of a free trade zone in Shenzhen, when Deng Xiaoping literally walled off the city to test whether different economic rules would benefit or harm China. The lesson was clear. More recently, China has experimented with different pollution policies in seven regions and with shared car services (like a Zipcar) in two different cities. The experiments allow policy makers to learn what works and what doesn’t before launching an initiative throughout the country.  Learning from small failures prevents large scale policy failures that are hard to reverse. Sometimes we get pushback from those arguing that you can’t apply the innovator’s method in a government setting (see our article in the Washington Post about this) because failure is not an option or they are dedicated to basic science. However, we have spoken to enough organizations in similar situations that we now know this is just a bad excuse, even for an organization like NASA. In the race to design the first flying machine, those who lost the race shared a common characteristic: they all tried to build the final flying machine from the start. By contrast, the Wright Brothers built a $20 wind tunnel testing model after model, then a series of kites and gliders, and then finally the first successful airplane. Or take a modern example: ENEL is a global utility company for whom safety is the first priority but they manage to apply the innovators method to safety: maintenance workers now “experiment” in virtual underground utility corridors before entering real corridors, driving down the accidents in these corridors. 

In summary,governments can apply the Innovators Method to test before they invest.  We think U.S. government officials would be more effective if they would design experiments and run them in parallel to see what they could learn before rolling out a policy to the entire country.   Whether it be reinventing education, lowering healthcare costs, or dealing with an immigration problem, the key is to design low cost experiments to quickly resolve uncertainties and learn your way to an effective solution.  In fact, if policy makers used this approach, it might take some of the partisanship out of decisions because policy decisions would be revealed as the result of experiments that were jointly designed by both parties.   Politicians see their roles as decision makers—and they all have a strong vested interest in seeing their decisions seen in a positive light.  That’s why they can never agree—and why they never want to help the other party be successful.  They need to change their mindset of being our country’s chief decision makers to being the chief experimenters.  If our government could develop the capability to effectively design and run experiments to test hypotheses about the best way forward, we might actually break some of the gridlock in politics and experiment our way to a brighter future.   By applying the Innovator’s Method, government officials will start to use the best tools of today for resolving thorny problems characterized by uncertainty.

Post co-authored with Jeff Dyer. Jeff Dyer is the Horace Beesley Professor of Strategy at BYU’s Marriott School of Management.  He is the lead author of the best-selling book, The Innovator’s DNA, and co-author of the new book, The Innovator’s Method.  To learn more about our research on uncertainty and innovation, visit learn.theinnovatorsmethod.com.