Blog post

“The Key to Government Innovation is to Cut Budgets by 50 percent”

By Andrea Di Maio | May 13, 2010 | 5 Comments


This statement was made by a senior attendee at a client event where several CIOs met to discuss about government 2.0 and other innovations when he was asked what is needed to trigger innovation in government.

He said that most of the stuff he is hearing about government 2.0, transparency, citizen engagement, cloud computing does makes sense, but there is nothing really new. Most of those who have been looking into how technology will shape government going forward have come up with scenarios where socialization and commoditization play a key role. But his contention was that to turn vision into execution, to actually embrace some of the disruptive transformation that such a vision implies, the only way is to close the tap, to force agencies to exercise their imagination, to apply creativity to the very basic problem of how to keep the lights on.

Whether 50 percent makes sense or not, I do agree that without dramatic changes in how resources are allocated, government organizations have no incentive to pursue radical transformation. It is not by chance that some of the most interesting and courageous initiatives take place at the more local level, where budget constraints have already manifested themselves in all their severity, and less so at the national or federal level.

Does this mean that tightening budgets and cutting the air supply to CIOs and their business colleagues will necessarily lead to innovation? I do not think so. Organizations need to have mechanisms and capabilities in place to seize that opportunity, to reward radical innovation, to determine what can deliver immediate and sustainable value versus what is desirable but not essential. They need to have a certain degree of maturity when it comes to sourcing strategies, vendor and contract management, ability to assess and employ emerging technologies, risk management, scenario planning, portfolio management. They need to have capable managers who have found themselves in similar situations, preferably in other industries, and who have the ability to adapt and lead people in difficult times.

Therefore cutting budget may be a necessary condition to trigger radical innovation, but by no means a sufficient one.

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  • That’s a scary scenario … I can imagine the first 12 months would be chaos, people working 14-hour days, quality would plummet, staff turnover would blow through the roof and corporate knowledge would disappear overnight.

    I don’t think drastic resource restrictions are necessary. I believe people working in government will change once they understand the citizen-centric service design aspect of Gov 2.0 because they want to do a good job, they want to serve the public and help people. I work for the federal social welfare agency in Australia so I’m not just saying this – I truly believe people will gravitate towards that which will guarantee government delivers better services and information faster and more efficiently.

    I’m still figuring out what impact this transformation will have on current organisation structures and skill needs – I suspect some people are going to get the short end of the stick but hopefully new opportunities will arise created by this transformation and they will volunteer for reskilling.

  • Cuts of this scale are just such a ridiculous contention. I’m disappointed you gave it air time, Andrea. At least without naming and shaming the fool who said it.

    And I’m glad you don’t agree with it.

    Like any other business, the public sector requires proper funding in order to get its work done. Would the person agree to have their budget, wages or people halved? I somehow doubt it.

    Yes, there needs to be a shake up in business and in the public sector where the momentum for change is slow. But massive budget cuts are not the shake up needed. A cultural shift that welcomes ideas, lets them get tested safely and funds the great ones is what we need.

    In my country, Australia, the federal public sector has been subject to ongoing budget cuts thanks to an “efficiency dividend” levied over several successive fiscal years. This cut, which is in the low single percentages, has done massive damage to many agencies’ abilities to deliver, introduced fear into workers over job security and prevented many innovative ideas from becoming fruitful as they were tossed aside in favor of “budget safe” ideas and business as usual.

  • Brian Redmond says:

    Andrea, thanks for the piece on stimulating innovation in government.

    While this would be drastic in reality, it could prove to be very useful as part of an exercise to identify what we should stop doing. In my humble opinion, and to loosely quote my friend Tim O’Reilly, IT organizations spend too much time doing heavy lifting and not enough time on value-added or innovative activities.

    The Acceleration Trap (HBR- April 2010), looks at how organizations might run innovation campaigns around the question “What should we stop doing”. Wonderful article.

    Also, there is nothing like a good crisis to unite the troops.

    Keep up the great work!

  • Bowen Moran says:


    Great post. In an organization facing large budget cuts, I’m a bit skittish to agree with you. Yet, I think the point that is being made is actually a rather good one. Until we start doing things differently in the face of a budgetary crisis we’re rearranging deck chairs on the Titanic.

    You’re not talking about cuts to staffing levels, service levels, and the like. What you’re talking about is cuts to budgets alone. That in and of itself is an important distinction.

    I agree with the idea of cutting off the tap, but it’s also important to remember that large amounts of innovations fail. Cuts often fall to their own traditional patterns too – in my own workplace, the first thing closed during a round of cuts was the innovation library. Innovations that result from cuts often step outside of these patterns. I think that building a corporate culture that rewards effective, innovative belt-tightening would have to be partnered with the cuts themselves.

  • I was expecting differeing viewpoints of course, and I do not have a precise position myself. I agree that there have been examples where continuous budget reduction, as Stephen points out. On the other hand most government organizations do not react unless they face a real shock, and this can help “unite the tropps” as Brian reminds us.
    While a “budget shock” may be a necessary condition for innovation, it is by no means sufficient: I agree with Bowen that innovative belt-tightening should be partnered with the cut themselves. There has to be reward for innovation and the ability to strike the balance between short term and long term prioprity: unfortunately not all government organizations exhibit these traits.