Politicians and Bureaucrats – Friends or Foes of Innovation?

by Dimis Michaelides

Politicians and bureaucrats are condemned to coexist with each other and with the other pivots of entrepreneurship: businessmen. Sweet or toxic their symbiosis is necessary, as they are both key players in the innovation game.

A private company in a capitalist system will innovate by starting up a new enterprise, or by improving its products and services, or by launching new products and services, or by extending its markets, or by reducing its cost base, or by changing its business model, strategy and structure. In competitive systems, private companies are learning to adapt to faster change because the alternative is to wither and die.

Government has many roles in innovation. First, a direct role in innovation through public institutions such as universities and research centers. Government can undertake fundamental research which has large costs and few immediate commercial benefits like the large Hadron collider, space travel and renewable energy. Or it can subsidize such research or promising areas. Mariana Mazzucato, a public innovation expert, has shown how 6 of the 8 most important features of the first smartphone (Apple’s i-phone) were generated by government or with public funds.

Second, government is an essential part of the ecosystem for innovation. Government is fundamental in providing a framework for innovation, including legislation and regulation on issues of public interest such as personal privacy and genetic engineering.

Third, government has a duty to offer citizens the highest possible quality of service at the best possible cost. The public sector in many countries has innovated extensively in the areas of health, education, defence, tax collection, public transport, managing public spaces, and so much more. Many things are far better accomplished online than in long lines.

Fourth, many brilliant examples of social innovation, targeting specific groups and not-for-profit are spearheaded by local or national governments.

Unlike private firms government does not wither and die. Neither do politicians and public servants. The question do they address innovation actively or passively or not at all? Countries where the public sector is open to innovation and change have proven to be worthy of their citizens’ trust and have boosted their economies too.

Worthy businesspersons, politicians and bureaucrats are forward-looking and envision the tremendous benefits of progressive change as well as the risks involved. Their appetite for change and risk, however are not the same.

Businesspeople have learnt they must change at least as fast as their competitors and those disruptive upstarts, those who are changing the rules their industries. Whilst they too face resistance to change, they are also more ready and able to overcome this resistance. As they go through one round of change they brace for another and they make change part of the life of their organizations. Otherwise they shall perish.

Public servants are more change-averse. They are less likely to lose their jobs because they are often both unionised, 100% secure in their jobs, without meritocratic performance management and mindsets firmly stuck in the past. They do not easily welcome deep, innovative.

Politicians of the vote-mongering type will bend to the wishes of change-averse people, especially if they come from powerful constituencies, such as the civil service. And in every change of government new people are quick to denounce whatever their predecessors have achieved or not.

Visionary public servants and politicians exist, but quite often they do not confront change with the urgency of private companies. Are they friends or foes of innovation?

In the worst of cases they make common cause with anti-change agents in business and cultivate stagnation. Through inaction and even hostility they can completely thwart progress. In the best cases they play an active role in the game. Ignoring or impeding innovation is of course very unpatriotic as their country’s competitiveness is bound to be damaged.

China and the US have forged different ways of making the politician-businessperson- bureaucrat collaboration work on innovation, Europe less so, though there inter-country differences are quite marked. The best outcomes come when all three constituencies are resolutely focussed on change, with full recognition of its risks and how to deal with the winners and losers from every act of innovation. Markets are powerful mechanisms for innovation, so are governments. Companies are powerful innovators, so are civil services. To promote innovation their symbiosis must be strong and fruitful.