GovTech and Government: a new partnership?

Though they face substantial challenges, GovTech founders are passionate about improving society by disrupting traditional public service provision with digital technologies and citizen involvement.

Whether seeking to deliver health or social services, ensure cyber security, or engage with diverse communities to shape public policies, the emergence of the GovTech industry in Europe is shaking up traditional ways of engaging in digital governance. While traditional start-ups provide solutions to consumer and business needs, GovTech start-ups focus on the public good. They are young, agile, and driven to explore emerging technologies to improve public policies and services of public concern.

With such promises, it’s perhaps no wonder that GovTech start-ups are steadily gaining market shares of billions of euros dedicated to improving digital services. However, are governments actually ready to reap the benefits of what they have to offer? Although the government already represents a fair share of the market for start-ups, breaking into this sector is challenging for GovTech because of the nature of government itself -- plagued by bureaucracy, silo thinking, and risk aversion.

As part of a joint research project between the Hertie Centre for Digital Governance and Bocconi University, Gerhard Hammerschmid and Jessica Breaugh (Hertie) and Greta Nasi, Marlene Jugl, and Natalia Oprea (Bocconi) are currently leading a project to explore the motivations of GovTech start-ups and what their entry into the government marketplace means for the innovation and digitalisation processes of government. The project explores the passions and purpose behind a number of selected GovTech companies in Germany and Italy. Through an analysis of interviews with GovTech founders, it aims to build a better understanding of the GovTech ecosystem across Europe and connect it to the broader phenomenon of digital altruism, or the motivation towards improving society through the use of digital technologies.  

For the public, by technological innovators
While our research is still ongoing, preliminary interview evidence has shown that founders of GovTech are both passionate about improving the functioning of government (efficiency gains in management, ensuring accountability etc.), and empowering citizens to become more involved in the service provision process and life of their communities. They all felt government is falling behind in digital innovation due to a lack of skills, overly rigid processes and/or being simply unable to think in digital ways. Yet, despite GovTech’s focus on public sector change, the founders themselves have carved out their own entrepreneurial identities, and relish in their autonomy to use their skills and interests – key factors as to why working in government was not attractive to them in the first place. By building their respective GovTech businesses, they were able to merge their passion for improving government with agile, problem-oriented solutions.

On the topic of money, most agreed that even with a pay cut, the prospect of building a business, product or inciting societal change was more rewarding than their previous jobs and salaries ever were. For them, the sense of ownership is a source of motivation, and gratification came more from the gradual “opening up” of government rather than the need to digitise and see their products “come to life”. Their drop in income and long working hours did not appear to hinder their motivations because they saw it as part of the job, and they were excited to be able to work on societal issues without the constraints of traditional bureaucracy.  

(Un)Explored new opportunities
What sets GovTech founders and their companies apart from traditional private partners of government is their ability to work within the system, understand the constraints, and remain patient. “It’s not a fast sell” said one interviewee in Germany, referring to the stereotypes of private sector start-ups as always fast-moving and fast-growing. Another interviewee echoed this sentiment, noting that though “governments are slow,” GovTechs (and their investors) need to be able to accept this and work within these constraints.

Another advantage is their offer of tailored solutions to the needs of users on both sides of the line: be they doctors or patients, civil servants or citizens. Compared to traditional IT suppliers or consultancies, “start-ups have a very good fit for government needs,” argued the founder of one Italian start-up. Yet procurement systems and entrenched habits in government much too often favour consolidated suppliers with wider portfolios of services, giving up on the customisation, flexibility and niche capabilities offered by start-ups. Despite the lengthy sales cycles, complex processes and other negative experiences, working with government is still seen as a driver rather than a deterrent for GovTech founders.

Building a community
The European Union and its member states have recognised the importance of GovTech and the need to promote programmes which incorporate GovTech into a larger digital ecosystem. However, to seize this opportunity, it is relevant for governments to consider not only how can they better support GovTech development but how to collaborate closer with them to ensure that collective interests and values are mirrored in these digital services. In this regard, our research contributes to a better understanding of how the values behind GovTech align with what offerings and interactions they establish with the government to make life better for citizens and improve public services. Although governments and GovTech are different types of organisations, the motivation, purpose and values behind their missions form an extremely strong lever in collaborating and achieving outcomes of public worth. As the recent global pandemic has shown, expectations and needs can change rapidly, and governments will have to rely on a range of actors -including GovTech- to make sure digital technology serves its citizens and communities in the best way possible. 

In order to gain a 360-degree perspective, the Hertie School Centre for Digital Governance, in collaboration with the  Institut für den öffentlichen Sektor e.V., has recently launched an online survey examining the relationship between German GovTechs and government, which focuses on the challenges and potential benefits of their continued partnerships. These results will provide a better understanding of  the unique relationship vis-à-vis the digitalisation process in Germany and Europe

Image: CC Levi Loot, source: Unsplash