The Ontario government should pursue innovation, not just promote it
Innovation is the implementation of a new technology, idea, or process that either improves or replaces an organization’s best practice. Innovation is regularly discussed in regards to business, but, just as businesses are capable of innovation, so are governments. In a business, innovation may lead to a higher profit margin; in a government, innovation may lead to a greater level of social benefit.
A notable example of innovation in government practices is the ‘nudge unit’ in the UK. Officially titled The Behavioral Insights Team, the quasi-government initiative applies insights from behavioral economics and psychology to public policy. The initiative seeks to increase the wellbeing of people by framing the decisions that they face in a manner that elicits an individual’s preferred outcome; most people want to be energy efficient, yet they do not always encounter options that ‘nudge’ them toward the most energy efficient option. Another initiative, ClaimStat, set up by the New York City Comptroller, collects and identifies any trends in the claims filed against the city, allowing the city to direct its resources toward specific areas where troubling patterns are emerging. An initiative like this will undoubtedly save on public resources.
Investment in innovative government practices and policies that increase the social return to each tax dollar should not be controversial, but there are, however, barriers facing innovation within the government. The incentive for the government to invest in innovation is complex; unlike private institutions, the allurement of profit is absent. There are often multiple interest groups that the government has to appease and simple revenue maximization and cost minimization does not independently guide policy decisions. Moreover, political cycles make large scale spending on R&D within the government politically risky; governments are inclined to pursue shorter term projects with outcomes that are more visible to their constituents. This is especially the case given the media’s tendency to highlight failed government policies. Hence, innovative policies are often substituted for the status quo.
Yet, the Institute for Competitiveness & Prosperity believes that there are purposeful steps that the Ontario government can take to decrease the political risk that is associated with government innovation spending. The Institute believes that in order to do this the Ontario government should ensure their innovative practices and policies are supported with data and are made as transparent as possible. Moreover, the Institute believes that the Ontario government should follow the principle of modularization when implementing innovative policies; the government should look to dissect an initiative into its necessary components and implement them systematically and incrementally.
The strongest argument against the status quo is one that is supported by research. By supporting innovative policies with data that show the potential benefits of an investment, the government is not only able to reduce the risk of the investment itself, but is also able to justify its innovation practices and policies to multiple interest groups. The policies advocated by the Behavioral Insights Team in the UK are implemented after numerous randomized control trials (RCTs) have been conducted. Using RCTs, the UK government is able to predictably estimate the monetary benefit of a potential policy. It is hard to argue against a policy that has a reliable cost-benefit analysis supporting it.
Investments in innovation often take time to manifest themselves in socially beneficial ways, reducing the amount that the electorate appreciates a government’s initial investment. By keeping investments in innovation transparent, constituents are more likely to appreciate a government’s investment even if they do not immediately experience the return. This will allow governments to be less susceptible to short-termism and invest in projects that they believe to be socially optimal, regardless of their salience.
A factor that also hinders a government’s ability to implement an innovative policy is the sheer size of public institutions; few Ontarian businesses’ revenues come anywhere close to that of the Ontario government. Even when there is a sincere desire to enact innovative policies, the feasibility of doing so at the provincial or federal level is limited. An example demonstrating this point is Obama’s online medical insurance system. The online system used to register people for medical insurance was implemented poorly, in part, because of the fact that it was a ginormous task that the government had little experience in managing. However, if the insurance system was dissected into smaller parts and implemented systematically, the chance of failure may have been reduced. The Institute believes that if the Ontario government follows this principle of modularization, larger scale innovation projects will become more achievable.
The institute believes that if the Ontario government follows the guidelines outlined above, there will be greater room for the Ontario public service to push an innovative agenda. In the recent provincial election we heard a lot about what services each prospective government may cut or expand, but we heard very little in regards to how they would structure their services or implement their policies. Perhaps now, in such fiscally constrained times, the Ontario government can start to emphasize, more than ever, the how instead of the what.
 The Behavioural Insights Team, “Behaviour Change and Energy Use,” 2011.
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