Innovation in Local Government
Since the UK formed in 1707, Scotland, Northern Ireland, England, and Wales have had their separate systems of local government. Interestingly, these different local governments stem back before the formation of the UK.
It was the 19th century that saw the seeds of change planted across the UK local governments – with each system's organizational and functional capabilities rapidly evolving.
While lacking in legislative powers, UK local governments enact regulations and levy council/property taxes – adhering to the parameters set by their respective parliaments.
UK local governments oversee environmental matters, education, highways and traffic, social services, firefighting, sanitation, planning, housing, parks and recreation, elections, and a slew of other community services.
In the 17th century, when Europeans colonized and settled in North America, the governments in Europe had very little control. Settlements were treated as business enterprises with shareholders and were granted full governmental authority, despite the King of Britain technically holding power.
This process was described as ‘pure democracy,’ though, only male property owners could vote.
Representative governments sprouted in many settlements, which was recognized by charters during the colonial years. Wealthier people ended up dominating local legislatures because it would take weeks on end (if not longer) to pass bills, and most citizens couldn’t afford to miss work.
The selection of governing council came down to an electorate vote in nearly all municipalities after the American Revolution, and in turn, state governments issued municipal charters. Then, in the 19th century, state governments granted charters to these regions, making them municipal corporations, leading to townships, county governments, and city councils sharing the decision-making load.
As the US grew heading into the 20th century, local governments gained jurisdiction over zoning issues, property taxes, and public parks.
Australia’s first official local government was established in 1838 – three years after the British settlement – and donned the name of the Perth Town Trust.
From there, came the Adelaide Corporation in 1840 in South Australia, followed by the city of Melbourne and the Sydney Corporation in 1842.
However, these primitive regional bodies were failures, and it took until the 1860s and 1870s for the implementation of a prominent, stable form of local government. The central principle of these city councils was centered around raising money for roads in rural regions.
While council reps were present at conventions, the position of local governments remained outside the bounds of the constitution.
Then, in the 1970s, the Whitlam Government contributed to a more robust level of funding for local governments in Australia that far exceeded grants for road construction, making general purpose grants available for the first time.
Today, in most parts of the world, local governments are responsible for roads, sanitation, sporting facilities, planning permits, immunisations, registrations, roads and bridges, street lighting, parks and reserves and more.
And they do a stellar job. If they didn’t, you’d quickly know about it. It wouldn’t take long for society to fall into primordial chaos if many of the services administered by local governments ceased to be.
If you took a one-metre step today and doubled the distance every day for 30 days, how many metres do you think you might have walked by the end of the thirtieth day?
I’ve posed this question, inspired by XPRIZE founder Peter Diamandis, to corporate executives and entrepreneurs at some of my keynotes. Responses range from a self-censoring silence to guesstimates of ‘thousands’, ‘100000’, ‘one million’ or simply a playful ‘lots’. I use this idea to illustrate Moore’s law, which observes that computing power has been doubling every 18 to 24 months since the 1960s. In 1971, Intel released the world’s rst microprocessor, the 4004. The chip measured 12 square millimetres and contained just 2300 transistors. Today AMD’s Epyc contains 19.2 billion transistors. Before you reach for your calculator, that’s 8.3 million times more transistors than the 4004.
In the 18 months to December 2017, computer processor companies added about 10 billion transistors to a microchip. That’s 10 times more in the past 18 months than we managed in the entire decade of the noughties, a time that also gave us the iPhone, Borat and Limp Bizkit’s Chocolate Starfish and the Hotdog Flavored Water (human beings are fallible, after all).
This, then, is the difference between linear and exponential growth.
We’ve reached a major inflection point in human history—not so much in the quality of Top 40 music, as in the acceleration in technological development and the implications of this on society.
It’s easy to write off Moore’s law as just another buzzword, like innovation, agile and disruption. People overuse such terms because they conveniently encapsulate a phenomenon we simply can’t ignore. It doesn’t make them any less relevant or important. So, to put Moore’s law into perspective, I ask the 30-steps question.
The answer?
One billion and seventy-three million metres. That’s 1 073 000 kilometres, or about 666 000 miles... It’s also the equivalent of walking around the world’s circumference 26 times!
Remember the famous legend in which the grateful emperor of India asked the inventor of chess to name his reward? The inventor requested one grain of rice for the first square of the chess board and double the number of grains for each succeeding square. The emperor happily agreed to what he thought was a modest reward. It turned out that by the 64th square the inventor had earned nine quintillion grains of rice (that’s nine million trillion), equivalent to over six trillion 50-kilo bags of rice, enough to cover all of India with bags of rice.
The power of exponential growth is essentially why ideas like immersive virtual reality environments, artificially intelligent systems, autonomous vehicles and multi-planetary humans are slowly but surely moving from science fiction to science fact. In many areas, these innovations are already being realised. As cyberpunk science fiction writer William Gibson famously noted, ‘The future is already here — it’s just not evenly distributed’.
Human beings are social animals.
Henceforth, like a peacock signaling reproductive fitness with its large and colourful tail, human beings signal through our haircuts, clothes, the cars we drive, the places we live, what we eat (or choose not to eat — here’s looking at you vegans and intermittent fasters), when we wake up, how often we work out, and the titles on our business cards — among a plethora of other things.
If you’re a leader, then you’ve probably felt the urge to signal how many people you have working for you. At the very least, you’ve no doubt been asked the status gathering question, “how big is your team?” before.
Once upon a time, the size of your team was indeed a reflection of status and the value of your pursuits.
The late Nobel Prize winner and British economist, Ronald Coase, put forward a timeless theory back in 1937. In an article dubbed The Nature of the Firm, Coase offered an economic explanation as to why companies emerge. He found that companies tend to hire employees rather than trade bilaterally on the open market because, as deliverables become more complex, the external transaction costs exceed internal transaction costs.
Coase noted that the cost of obtaining a good or service externally is actually more than just the price of the good. Costs extend to search, reconnaissance, bargaining, intellectual property protection, on-boarding, training, monitoring and compliance costs.
Firms emerge because they arrange themselves to produce what they need internally so that they can mitigate or avoid these costs altogether.
Coase argued that arms-length transactions (like buying a coffee), and basic contractual arrangements can be performed externally for cheaper than they can internally, however as contracts and transactions become more complex, it makes less sense to do them externally.
Vertical integration speaks to complex transactions whereby there is a need for synchronous communication and integration with upstream and downstream activities.
Coase observed that firms grew — by way of headcount — so long as the green line stayed below the blue line. It was the more complex transaction that the firm would take in-house, and therefore stimulate its employee growth.
However, as the World Bank found in its report on The Changing Nature of Work, the internet, free trade agreement and improved infrastructure have reduced the cost of external transactions, including cross-border trade, allowing for transactions to take place wherever costs are lower.
“New technologies have lowered communication costs. As a result, firms are less vertically integrated and managers are outsourcing more tasks to the market.”
The report cites JD.com, China’s second-largest e-commerce company, as an example of this; it has more than 170,000 online merchants on its platform, many in rural areas.
This is why headcount — to those in the know — is losing its relevance as a signaling mechanism because it is no longer directly correlated with the value of an organization. The badge of honor for a leader today should be on creating the most amount of value with a smaller amount of inputs.
As headcount grows and firms become bloated, internal transaction costs grow with it — communication becomes a nightmare and, as the stakes are raised, movement-stifling process is introduced and accountability is spread thin (by way of numerous multiple hour meetings with too many people at the table) — and eventually they reach that of external costs.
This is when external markets beat firms. At this point, firms are merely trying to survive — as was the case with Blockbuster — rather than innovate.
Netflix today has just 3,500 employees, but a market cap of over US$170 billion. Compare this with Blockbuster, who at their peak, had over 60,000 employees but a market cap of just US$5 billion. Amazon makes twice as much revenue per employee than its brick and mortar rival, Walmart.
In light of these changes, Tim O’Reilly of O’Reilly Media, and author of WTF: What’s The Future and Why It’s Up To Us, put forward what he calls the Business Model Map for the next economy.
In order for companies to be competitive in the digital economy, they should ensure their business model aligns with that of the new economy, characterized by talent and services on demand, automation, and magical user experience.
Talent and resources on demand have come to embody some of the venture-backed tech success stories of the day; whether that be UBER, Airbnb or Upwork. The gig economy was estimated at US$3.7 trillion by SIA as at October 2018, and this number continues to grow.
56.7 million Americans are doing freelance work today, up by 3.7 million since 2014, and these jobs extend to computer programming, penetration testing, social media marketing, tutoring, home maintenance, delivery, driving for a ride-sharing company, providing care, sales and odd jobs.
These jobs give people the freedom and flexibility that they may struggle to find in traditional permanent employment. Freedom to choose what to do, and where and when to do it. Flexibility to manage a schedule in accordance with a chosen lifestyle.
For most of the aforementioned jobs, algorithm-driven platforms exist that ultimately serve to augment job prospects, but also client-vendor relationships — as is the case with, say, Upwork — the global freelancing marketplace that was valued at US$1.55 billion at the time of writing (June 5, 2019).
The internet makes it possible for today’s firms, such as the “Uber for X” marketplaces, to do what only exceedingly large organizations could do previously.
Today’s world is more volatile, complex, ambiguous and uncertain than ever.
As Machiavelli put it, “a prince is successful when he fits his mode of proceeding to the times and unsuccessful when his mode of proceeding is no longer in tune with them”.
By subscribing to the fundamentals underpinning O’Reilly’s model, councils can update its maps and play 21st Century ball, and avoid becoming increasingly irrelevant as the private sector finds ways to commercialise and deliver services that for Centuries have been delivered by Government.
T and the changing nature of the firm is seeing many private enterprises achieve today what they needed 10 times the capital and resources to achieve yesterday.
But when it comes to the public sector, citizens are paying more for the same services they got yesterday, and public sector spending continues to rise with, testament to bloated costs within Government, that fail to subscribe to the changing realities outside their walls.
In Victoria, Australia, public service headcount has grown by about 15% in the past six years alone (2013-2018).
Over the past few decades, US spending on Medicaid and Medicare has far exceeded the rate of inflation. At the current rate, Government spending on US healthcare will almost definitely overtake private spending in the near future.
Canada’s healthcare spending almost mirrors the United States’, increasing by 7.4% annually from 1999-2009. It’s a rate that blows the growth of GDP and inflation out of the water, and as a result, health care consumes about 40% of several Canadian provincial budgets.
In the United States, K-12 education costs have doubled in the last 30 years. Throughout other OECD countries, there are striking similarities – with primary and secondary school spending per student, increasing by 40% between 1995 and 2006.
The average published tuition and fee price at public four-year institutions rose by 7% ($640), from $9,590 (in 2018 dollars) in 2013-14 to $10,230 in 2018-19. Over these five years, the average
net tuition and fee price rose by 10%, far outpacing inflation.
Universities suggest that better lab equipment and research facilities, as well as stadium costs are the cause for this hike – but it has more to do with unnecessary and ballooning administrative costs
During the 1980-1981 school year, public and private institutions in the US spent $13 billion administration. By the 2014-2015 the same grouping of administrative expenses had risen to $122.3 billion – an order of magnitude increase.
The private sector is embracing O’Reilly’s model, and as such, is delivering much more with much less.
The Kahn Academy has just 180 employees, yet it has generated revenues of US$44M and put over 100 million people worldwide through its online courses. To put this into perspective, the average Australian council has between 500 and 7000 full time equivalent employees, depending on the geographic size, location and population density of the area they oversee.
For the cost of one manned aircraft, enterprise developed UAVs (unmanned aerial vehicles) can get eleven aircraft in the sky for the same price.
The cost of incarcerating a low risk offender in the US is $78.95 per day, but the cost of electronic monitoring is just $15, less than one fifth the price.
When Kodak declared bankruptcy in 2012 leaving tens of thousands of employees to search for a new home, Instagram was acquired by Facebook for US$1 billion. The kicker? Instagram had just 11 employees.
Whereas access to a public car used to cost $100, car-sharing companies such as Zipcar charge as little $7 an hour for a rental, including both insurance and gas. Before companies like Zipcar took the world by storm, drivers rented vehicles for days at a time since rental businesses weren’t open on weekends. Now, drivers rent for as long as they need, when they need it, at barely even a fraction of the price compared to the past.
Airline travel was only a viable option to the wealthiest people, but now companies like Southwest Airlines make venturing the world a frugal experience.
As evidenced by the rundown of local government histories, the utilization of regional councils could be so much more than it’s current form. After all, for a state, province, or country to thrive, every city and town within them must flourish.
Considering the inefficiencies plaguing higher realms of governments and that citizens are saddled with growingly unaffordable services, failing to take advantage of immensely skilled and influential city employees is an unfortunate oversight.
Take Australia, where 170,000 local government staff possess high levels of technical and professional acumen. Local government in Australia earns $15 billion annually through means such as property taxes and services.
The accumulation of such profits is impressive. If these city councils had more resources dedicated to innovation and impacting change, perhaps federal governments could collect enough revenue without inflating prices of services that are necessities, like healthcare and education.
Local governments have their finger on the pulse because they live in these areas and know the varying details of any given regional deficiency. They see the nitty-gritty nuances existing within their community and understand the exact areas which need improvement.
Seoul welcomes input from citizens – so when somebody tweeted a complaint about the city’s bus line not running late enough – mayor Park Won-Soon responded immediately. Eight months later, the Night Owl bus line was running throughout targeted locations in the city.
Won-Soon operates under the belief that local government exists to harness collaborative innovations with its citizens. As such, when a citizen reaches out with something that needs fixing, the infrastructures are already in place to make it happen promptly.
Still, how exactly did one tweet lead to a change on such a large scale in a relatively short time? Well, Seoul’s system ensures the relaying of opinions and feedback of citizens to the appropriate departments and individuals.
From there, after analyzing the situation, Seoul transportation leaders decided that while extending the running of the bus lines wasn’t cost-efficient, they identified where late-night lines would be most effective. The Seoul Metropolitan Government’s (SMG) ties with the private sector paid dividends, with mobile telecommunication companies helping them accumulate necessary data. Mobile phone usage clearly illustrated people’s movements late at night, letting the SMG know the ideal routes for busses at those times.
Pushed forth by Mayor Bloomberg, the NYC Service had citizen participation as its core principle. The idea was to respond to specific local needs with something called ‘impact volunteerism,’ which necessitates planning and relentlessly committing to a desired goal.
One brainchild of Bloomberg’s initiative was NYC Cool Roofs, where volunteers painted nearly four million square feet of New York's roofs with white reflective paint. It saved tens of thousands of tons of carbon emissions because it allowed citizens to rely less on their air conditioning.
Bloomberg’s plan shows the potential for growth of local innovation into something bigger than just one city or municipality, as the success of the NYC Service has gone national, leading to 162 cities in the US implementing a similar city strategy.
San Francisco became the first major city to enforce open data laws and is currently #3 in the country in quality of data. Citizens have transparent access to the intricate details of tax money spent on government contracts, the fuel consumption of cars on the market, or the number of permanent resident visa applications in each state/province, for instance.
In 2012, New York city started their version of open data law and had 2,000 sets published, as of 2018.
Throughout the Big Apple, open data has made its mark and been a significant factor in bringing more transparency to community projects, predicting the lifespan of New York street trees, and building on the inner-workings of the city’s sewer system.
Sugar Land, Texas, uses GIS tech as a primary component of economic development and the city’s capital improvement projects.
Geographic information systems – computer systems that store, manipulate, and analyze geographical information – might be old technology, but many cities have put a new twist on these powerful mapping tools.
With roots stemming back to the 1970s, GISs are now extremely cost-efficient, easy to use, and mainstream. Thus, they’re an affordable means for cities to examine financial strategies that will enhance the following functions of a community:
· Public safety
· Public transit
· Social service activities
· Citizen engagement
Avondale, Arizona, is encouraging its 78,822 citizens to engage via a mobile app and online forum where they can offer ideas that other residents vote up or down.
Westminster, Colorado provides its nearly 111,000 citizens with a similar forum and gives rewards – such as free passes to the driving range or fitness programs – for regular engagement.
These online engagement strategies intend to change the public perception that local governments aren’t trustworthy. Leveraging technologies such as social media tools, online surveys, and e-commerce rewards programs in today’s climate – where physical, social interactions are limited – is integral to fostering fruitful citizen engagement.
The New York Police Department spearheaded CompStat in the 1980s – it combined data and staff feedback, which increased performance from officers and captains. The success of CompStat spurned a multitude of imitations, and now more than ever, stat programs continue to evolve and expand.
Thanks to the influence of CompStat, Louisville’s ‘LouieStat’ program helped save $23 million in unscheduled employee overtime while pinpointing performance inefficiencies.
On top of stats programs, data analytics also improve a city's overall performance.
Analytics programs in Denver, Jacksonville, and Phoenix examine data to discover insights that promote successful local governance. Los Angeles possesses an online system that tracks the city’s economy, service delivery, public safety, and government operations.
Statistical and analytical systems allow for real-time decision making. These programs are thereby helping local governments act with immediacy and urgency, rather than allowing small problems to grow into widespread catastrophes.
Innovations in communities create a self-sustaining cycle that benefits the cities/towns and the businesses within.
Think about it; the Wright Brothers didn’t only change transportation forever when they invented the world’s first flying machine—they put Dayton on the map. The brothers' innovation allowed the city to create tourist attractions. With an influx of interest in a previously overlooked location, there were suddenly infinitely more revenue opportunities to bolster Dayton’s economy.
Conversely, when cities innovate, it allows for even the most vulnerable people living in that community to lead a superior quality of life.
However, innovation doesn’t just happen on its own. There’s a process behind it, with the right people put in positions to assess and analyze a problem, then put forth a creative solution.
Of course, for local governments and communities to innovate, they need a certain level of empowerment granted from higher levels of government.
To that point, federal governments from all over the world – like in England and Australia – are finally seeing how regional councils apply new and practical approaches in tackling big-picture issues.
England’s local governments made their mark on Local Enterprise Partnerships. In working with the central government, local counsels are establishing ‘sub-regional’ authoritative bodies to provide more expert levels of service and strategic planning across multiple local government areas.
Also, Australia’s New South Wales government is currently funding several pilot regional joint organizations with the intent to build on collaborative government efforts between local, state, and federal bodies. These initiatives involve elements of collaboration and resource sharing between state agencies and councils that will strengthen strategic planning, execution, delivery, and major projects.
Australia’s joint government organizations present the chance for a platform that promotes collaborative harmony between all levels of government.
Governments at the municipal level will always experience setbacks when seeking funds for innovations. Their issues are sometimes (mistakenly) considered small scale, localized, regional, and not representative of a grander scale.
Despite these obstacles, many of the above examples show that cities and communities still find a way to innovate with disruptive technologies and ideas. Part of the reason this happens is due to communities empowering themselves to innovate.
Many cities are following in the footsteps of Startups to bolster their innovation efforts. There are local communities in the world that form incubators and host hackathons to foster bold, brave, and wholly original ideas—but that's not enough in today's climate. A plan or structure should be in place, and when decision-makers in a community embrace the process of Startup founders, they'll execute those game-changing innovations.
Therefore, city leaders must do the research and understand the models of thriving Startup ecosystems.
Through applying those Startup principles, decision-makers on a city council might give those higher-level government officials no other option other than to collaborate and work with those innovative ideas—which leads to the next section:
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In recent years, prominent corporations have geared towards acting more like Startup organizations, because it’s the environment most conducive to innovation.
SBA research shows that smaller businesses produce 16-times more patents per employee than large corporations.
Then, it should come as no surprise that local governments with a thirst for innovation are following suit and adhering to the business models that Startup companies use so prolifically.
City’s prioritizing the ability to roll with the proverbial punches and pivot when needed put themselves at a distinct advantage.
The very nature of an agile business model breeds innovation because adjusting to every obstacle on the fly necessitates creative solutions from every employee, top-to-bottom.
Denver, Colorado is partnering with Panasonic to build a 400-acre, $500 million ‘smart,’ 100% connected community, called Peña Station Next. Sensors and cameras strewn throughout the city/lab-hybrid deliver data to optimize urban living for citizens. Plus, robotic shuttles with on-demand technology will reduce traffic, and wirelessly controlled streetlights will save energy.
Also, environmental monitors will discern the optimal times to plow snow and the best places to install solar panels.
At the crux of being ‘agile’ means gearing up for change. So, at the forefront of Denver’s model is staying ahead in a world where the ‘future won't look anything like our world does today,’ claims Kelly Brough, President and CEO of the Denver Metro Chamber of Commerce states.
Popularized by platforms such as Kickstarter and Indiegogo, crowdfunding allows people to pool resources towards a larger goal—generally through online donations.
When Kickstarter launched in 2009, many Startup companies famously tapped into rewards-based crowdfunding to gain initial customers and test their idea. These efforts leveraged the goodwill of friends, family, and fans into funding an innovation. These companies would incentivize donations with rewards, such as an opportunity to be one of the first to own a new product or invention.
Many experts believe that every Startup should host a crowdfunding campaign. Furthermore, there’s a direct link between crowdfunding and innovation. After all, if a fresh idea is viable and exciting enough while solving a consumer problem, the masses will happily dish out the cash.
Kansas City, Missouri learned from successful crowdfunding examples and started the B-Cycle program. To improve the bike share's infrastructure system, Kansas's local government took to the Neighbor.ly platform and launched a crowdfunding campaign, running simultaneous mini-campaigns which ranged from goals between $50,000 to $250,000. Success would bring up to 5 bike stations to 10 different Kansas neighborhoods. The campaign is currently in its second phase, with the first focusing on maintaining current stations.
Another instance of a local crowdfunding campaign was when in February 2014, a neighborhood near Memphis, Tennessee called Binghampton used the method to account for the last $69,000 of the Hampline. The successful campaign led to the construction of a two-mile cycle track connecting Binghampton to nearby parks and trails.
The city raised the money with the crowdfunding platform known as ioby, which helps launch environmental and community development initiatives around the country.
As much as local governments should embody the innovative spirit of a Startup, taking this approach is challenging without hiring such a firm or agency to – at the very least – point them in the right direction.
Below, are a few examples of GovTech Startup businesses who’ve made waves in the industry:
In Appalicious, Yo Yoshida developed a mobile technology meant for disaster response. The beta version of the Disaster Assessment and Assistance Dashboard found its home in San Francisco. Now, after a FEMA endorsement, the revolutionary technology is rolling out in cities nationwide.
Here are some features:
· There are real-time emergency resource and danger mapping systems
· Citizens can request assistance
· First responders can update first-aid locations
· Local businesses can advertise recovery services
The perception of the design on most government websites was never particularly flattering. Though, Capriza navigates those turbulent website waters and turns it into a user-friendly mobile app.
Co-Founders, Oren Ariel, Ronnen Armon, Amnon Landa, and Yuval Scarlat have cut out the coding, API creation, and upgrading, and replaced it with simple drag-and-drop technology.
With its new app, Capriza pairs users to a mobile window with the agency’s old site and allows for the placing of features with one easy click.
Mobile-based resources in governments aren’t always robust, so this offers an affordable and efficient alternative to a full-throttle mobile redesign.
OpenGov simplifies complex government finances—placing them into easily decipherable charts. The Startup innovated a cloud-based platform offering historical budget analysis to both government officials and citizens alike.
While the tech seems straight-forward, there’s much more to it than meets the eye. The interface segments financial breakdowns on a per-department basis. All it takes is one click for users to delve deeper into revenues and expenditures.
Since Zac Bookman, Nate Levine, Joe Lonsdale, and Mike Rosengarten founded OpenGov in 2012, it’s received $22 million from investors, and obtained over 275 governments throughout 37 separate states as public sector customers.
Transitmix is a mapping tool allowing planners to predict costs and ridership in real-time.
The idea behind the innovation stems from the need for a better way for city transportation planners to draw bus routes than with highlighters and printed maps. What’s more, is Transitmix blends all data acquired during route-planning into one tool.
Up until Transitmix’s poignant industry disruption, local government decision-makers and citizens were stuck decrypting rows of coordinates in Excel files or deciphering complex Google Earth coordinates.
Lastly, Tiffany Chu, Daniel Getelman, Sam Hashemi and Danny Whalen’s platform crunches an abundance of information (e.g., US census data, internal data) so that it customizes routes to the appropriate demographics.
Local governments and innovation seemingly go hand-in-hand, and as more city councils and other municipal bodies embrace this notion, they’ll have an increasingly positive impact on more substantial government outcomes.
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The WorkFlow podcast is hosted by Steve Glaveski with a mission to help you unlock your potential to do more great work in far less time, whether you're working as part of a team or flying solo, and to set you up for a richer life.
To help you avoid stepping into these all too common pitfalls, we’ve reflected on our five years as an organization working on corporate innovation programs across the globe, and have prepared 100 DOs and DON’Ts.
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