While governments can’t afford to mimic the startup model entirely – nor should it with the margin for error far narrower – what they can and should do, argues Dr Jon Rimmer, Chief Experience Officer at Mercator Digital, is borrow key traits to improve innovation
Right now, governments are under a huge amount of pressure to match the pace of innovation seen in the startup world; whether that’s rolling out new tech, delivering more responsive public services, or making decisions more quickly.
But the comparison only goes so far. Unlike startups, governments operate under intense public scrutiny, face strict accountability for every penny spent, and have to work through any political fallout if things go wrong.
That in itself is a huge challenge, not least because innovation, by nature, involves risk and even a degree of failure (as many as 90% of startups fail). Add to this the high-stakes world of government digital transformation – where services must be secure, scalable, and citizen-focused – and it’s easy to understand why governments look to big, established systems integrators (SIs) to handle their tech projects. The problem, however, is that the traditional delivery models commonly used here often carry the weight of hierarchy and red tape, stalling innovation.
Take the NHS Test and Trace (NHST&T) initiative as a key example. While much of the underlying technology needed to make the system work already existed, complex structures and layers of approval slowed progress and huge costs. Large SIs were awarded major multi-million pound contracts, often with minimal competition.
Despite this, and a total budget that ended up rising to some £37 billion over two years, the project ended up seeing a series of well-documented setbacks. Meg Hillier MP, Chair of the Public Accounts Committee, said: “Despite the unimaginable resources thrown at this project, Test and Trace cannot point to a measurable difference to the progress of the pandemic, and the promise on which this huge expense was justified – avoiding another lockdown – has been broken, twice.”
It highlights a clear challenge: a default to large SIs and complex hierarchical delivery models, even in cases where smaller, more agile innovators might have delivered faster, cheaper and more responsively.
What needs to change
With examples like Track and Trace still fresh in the public’s memory, and digital transformation now central to public sector reform, partnering with SMEs directly or borrowing the startup-style way of thinking could offer a solution. Here’s why:
- SMEs often compete for government work on merit, not legacy relationships, which makes them hungry to prove themselves
- Many embrace open-source technologies and reusable components, aligning with Government Digital Service (GDS) principles around interoperability and avoiding vendor lock-in
- Lower overheads and leaner teams mean they typically offer better value for well-defined projects
- SMEs thrive on speed, unburdened by layers of internal governance, which is perfect for a digital environment that favours test-and-learn approaches and agile delivery
- Often founder-led or comprising smaller teams, working with SMEs tends to result in close-knit, more personal relationships with senior experts (such as AI and data analytics, user research, service design, or legacy system integration). Here, issues are spotted early, ideas flow freely, and decisions get made fast.
Despite their strengths, SMEs still often face hurdles when working with governments, from complex procurement processes and large-scale delivery expectations, to tight security requirements. As such, the right commercial support – frameworks like G-Cloud or Digital Outcomes and Specialists (DOS) – must be considered by government teams. The key is to design delivery models that support learning (not perfection) and that fit the project, not the other way around.
It’s also wise to use SMEs for discovery phases, quick-turnaround services, or specialist components of larger programmes. Or better yet, design workstreams that allow them to lead. From there, you can expand on what’s proven to work, which is a much easier way to secure buy-in within the government.
And finally, even if not working directly with an SME, governments can take a leaf out of their playbook by empowering their own internal teams and giving them the autonomy, ownership, and clarity of purpose that a small business thrives on.
More than a seat at the table
Thankfully, we’re already seeing much of the above take hold within the UK Government. Last year, for example, it adopted a ‘test and learn’ culture to tackle public sector challenges, including six- to twelve-month secondments of specialists from technology companies. Earlier this year, that same approach also saw a ‘start-up mindset’ introduced to test AI applications and scale successful experiments.
It’s certainly a positive step in the right direction. But whether governments bring in SME expertise directly, or borrow key traits from the way they operate, if we want public services that are genuinely user-centred, cost-effective, and future-proof, it’s time to give these smaller, agile innovators even more influence – not just a seat at the table.
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