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Why Governments Can't Be As Innovative As Businesses

It's a long held belief that governments should be run like businesses, but would that be wise?

25Oct

There is little doubt that the world today is a mess. We have seen a huge rise in fascism across the globe, with Nazis marching in the streets in the US. We have seen Britain take the self-destructive decision to sever ties with its biggest trading partner and isolate itself from the world. In the Philippines, the President insults other world leaders and is promoting extrajudicial murder in the name of safety. In almost every country the environment is being destroyed and we are seeing a huge increase in the number of natural disasters, with 4 huge hurricanes hitting the US within 3 weeks, causing billions of dollars of damage. These are also just the tip of the iceberg, the international challenges. In reality, there are millions of issues impacting people at a local level, from disaster relief not being effective in Puerto Rico to locals being priced out of buying homes in London.

The issue is that the governments who need to think of innovative ways to fix these issues are, by their very nature, not particularly innovative, they are slow-moving, backward looking, and all too often ineffective. They are the opposite of how companies try to operate, which is the reason why companies like Google, Apple, and Uber manage to easily find ways around regulations and tax laws, they just need to be a little faster than the rules being created. This isn't difficult either, according to data from Congress.gov the average time for a bill to become law is 263.57 days, enough time for almost any company to nullify the potential challenges.

However, companies, by their founding principle of being a profit creator, are not designed to solve the biggest problems in the world. Many look to prosper from these issues, such as Tesla using global warming as a de facto marketing strategy, but the only companies who are large enough to tackle the biggest issues in the world are those who also need to make the most money. It makes the argument that 'governments should be run like a company' that's often touted by influential media figures even more confusing because is this something that would be possible or that could work if it were?

We took a look at why governments can't be as innovative as companies and why trying to run a government like a company simply cannot work.

Accountability

Every government is accountable to a huge number of people, all with different and constantly evolving ideas around how their country should be run. Governments must walk a fine balancing act, attempting to please as many people as possible without making so many angry that they rise up and push society into chaos. At the same time, governments must also keep in the backs of their minds that they need enough votes to get into power so they can carry on putting their ideas into practice, presumably believing that they will be the best for the country. Millions of voters with millions of different ideas on all the minutia of running a country. Hundreds of politicians with different ideas of how to interpret the majority’s will and how it should be put into practice - if it should at all.

In business, on the other hand, organizations are only beholden to their stakeholders and innovation programs must only have two things in mind - further the aims of the organization and make money. For instance, Patagonia’s aims are to make money while also investing in important environmental projects. Past that, they don’t really care.

Success and Failure

In business, failure is often a good thing. As Thomas Edison famously said of his 10,000 failed attempts before creating the first lightbulb, 'I have not failed. I've just found 10,000 ways that won't work', the more time and money he spent perfecting something, the better it got, even if he failed thousands of times first.

This is the same with business, whether its a process, a new product, or an entire department, they are given money and space to fail. Nobody is going to get something right the first time they do it, but if he or she do it enough they are going to succeed. In government, this is not an option.

When you are spending money given by taxpayers, they demand that it is spent on projects that have a quick and meaningful result. This is supported by increasingly popular phenomena amongst the Senate and Congress in the US, where individual senators or members of Congress have begun creating 'waste books' which document excessive government failures. When you consider the beginnings of many innovative ideas, without context they seem like colossal wastes of money. For instance, on the surface, a $706,800 grant given to researchers at Duke University to study mantis shrimp fighting seems like a colossal waste, but the reality is that this is simply the foundation to understand how to create huge forces when striking an object underwater. When it is put in this context, suddenly it isn't so wasteful, but due to financial constraints and the constant need to justify spending, these initial seemingly random experiments are often criticized or simply not funded, so the eventual innovations don't happen.

Terms

Since taking office in January 2017, Donald Trump's legislative agenda has had an almost single-minded strategy - destroy anything that President Obama did in the preceding 8 years. This has taken the guise of striking down the DACA act, attempting to undermine the ACA, pulling out of the Paris Climate Accord, and decertifying the Iran nuclear deal, each of which has had little strategic benefit (indeed after each of these acts his approval rating dropped). However, although Trump seems to be going about it in a very ham-fisted way, this process of destruction is something that happens whenever a new government is elected.

Innovative ideas, especially when they are going to impact millions of people, take a very long time to get right, let alone deploy, so there have been several examples of plans under previous governments being scrapped midway through because of a change of government, despite their clear benefits. For instance, in the UK, the digitization of health records across the entire NHS was scrapped by the Conservative government after the project was started by the previous Labour government, despite the project already costing several billion pounds. This is a prime example of an innovative idea with huge potential benefits being scrapped because of price and also because it had little support as it was started under a 'rival' government.

Another major issue is term limits, which means that people who have got better at their jobs and grown to understand the longer-term impacts of innovation are forced to leave. In government, this is a huge issue, especially given the often inexperienced people in charge of departments. For instance, Ben Carson, the current Secretary of Housing and Urban Development, has no experience in this area and was given the role through his allegiance to Donald Trump throughout his presidential campaign. It may end up that Ben Carson becomes incredibly knowledgeable in this area, but given that he is likely to only have a 4-year tenure, it is unlikely that this will happen quickly enough to see any real innovation taking place in housing under his leadership. Similarly, in the UK, there are several people with little-to-no experience running important departments, like Boris Johnson, current foreign secretary, who has no kind of diplomatic experience. He may in time become skilled enough in this role to innovate, but by that time the chances of the current government still being in power is slim.

Multiplicity

The single biggest reason companies can always out-innovate governments and why governments can't innovate like companies is simply that governments need to cater to almost every part of people's lives, from their healthcare, transport, and education through to the upkeep of their parks and how the military is used. The scale and spread of what governments need to do to succeed far exceeds anything that any company in history has attempted.

One of the most powerful innovation tools that companies have is a clearly defined purpose that can then lead them to create products and processes aimed at attaining this purpose. For instance, Facebook know that their purpose is to connect the world, Apple know they want to create the best looking and best-performing technology, and Ford knows that they need to create the best cars in their categories. A government will never have this single issue benefit that most modern companies have because they need to serve the needs of a huge variety of people. At the same time as providing high-quality healthcare, they also need to create a more tolerant society. At the same time as building roads, they need to make sure their military is capable of defending against threats. At the same time as providing clean drinking water, they need to make sure that corruption is weened out of their governments. There are so many vital elements to effective governing that concentrating the kind of effort needed to create an innovation on one area simply isn't possible like it is in business.

There are thousands of things that need to be addressed by governments every single day that don't need to be worried about in regular companies. The fact that Flint, Michigan has lead in their water doesn't impact on the way Apple works. North Korea testing a missile doesn't mean that innovation at Uber slows down. A diplomatic crisis with Iran will not distract Facebook's attention from their goals. If a government took this same approach, millions could die. 

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