How GovTech Can Reinvent the State

We are experiencing an unprecedented global transformation marked by three trends: first, a growing demand for more and better services, quality of life and immediate response expectations. Second, rigid authority structures that can adapt to the streamlined and dynamic needs of today’s economy and society. Third, the data revolution and technology and their increasing adoption by governments in an effort to become smarter and more proactive.

It used to be an era of change, it is now the change of an era. At its core, it is an evolution of social and institutional paradigms, i.e. increasingly complex social standards, incentives and individual and collective political and economic behaviors. According to the World Economic Forum, this change is closely linked to contemporary technological advances, and is transforming the way individuals and society live, work and interact. In particular, digital technologies and data help us understand and act in this new complex reality in which we live, and also give meaning to this reality and help us find new patterns and ways of acting. 

For governments, this implies a change in how to act within this new paradigm. Along with this systemic change, governments at all levels face challenges related to incremental demographic pressures, crisis of confidence in institutions, budgetary pressures and lack of agility in providing public services and in internal management. Suffice it to say that by 2050, 7 billion people will live in cities, while indexes such as quality of regulation and inequality are in negative territory. It is no coincidence that 75% of Latin Americans do not trust their institutions, and that democratically elected governments are increasingly pushing extreme— rightwing or leftwing—agendas.

Budget pressures on governments exacerbate this outlook. Limited resources and increased demands limit their use to sustaining social programs and current spending, undermining the ability to operate, attract and retain highly specialized talent and innovation. This closes a vicious cycle, where old problems are still addressed with old formulas, while the ability to experiment with new solutions is limited.

GovTech potential

In this context, new approaches to cooperation and partnership between public institutions and private stakeholders can help overcome government obstacles to adapting to this new 21st century paradigm. 

GovTech is one such sector, because it gives governments the opportunity to become more efficient and technologically advanced, while supporting high value added sectors with public procurement. The key is to understand that efficiency, openness and technological progress are not goals to move towards. On the contrary, they are specific areas of operation. Actionable activities, which, if performed well, can help governments adapt to the needs, demands and realities of today’s world.

From this perspective, GovTech ecosystems around the world must move towards a new conceptualization of their own identity. GovTech cannot be a mere activity, one business type, or a funding source. To reach its full potential, GovTech must be seen as a systemic movement capable of creating structural changes across the public sector, not only in the field of innovation. In the past, sectors such as FinTech have achieved this, by playing an increasingly vital role in the financial industry under this perspective. Stakeholders in the GovTech ecosystem must do the same, recognizing that both government demand and the supply of startups need each other to thrive and address the demands of today’s consumers.

This has important implications for governments, the private sector and citizens. For governments, this means working on developing thorough GovTech policies, which at the same time favor them by increasing capabilities, talent, intelligence, and implementation of public policies.  For the private sector, it means collaboration and strict demands to ensure the right conditions for profitability, but also co-responsibility in generating public value. Lastly, for citizens, it means a new way to receive benefits from the government through the micro-outsourcing of specific stages of the provision of public services.

A change of era represents opportunities for those who recognize it. Proper conceptualization of GovTech is necessary to recognize its full potential for the future of governments that are still struggling to catch up with present times and adapt to people’s needs as they enter the second decade of the 21st century.