Social innovation in the public sector

Using analytics to build a stronger future

All around the world, speculation about the long-term consequences of the economic downturn continues. Looking at Asia, we could argue that this region proved rather resistant, that new trade corridors got strengthened for Australia in particular, and that the crisis has already leveled there. In Europe, where many countries are still feeling the pain of the crisis, the view is quite different.

Given the global, interconnected nature of our world, however, no country is impervious to the changes now taking place as a result of the near collapse of the world's financial institutions. Even those regions that have recovered quickly or felt only slight impacts from the downturn will long be making policy decisions based on its lasting effects.

In that sense, it does not matter how hard you were hit. The future winners will be determined by who can master the new intersection between globalization, citizen needs and changing economic realities.

Overall, we now see that governments around the world are facing many similar issues. These include mounting program costs, aging populations, demands for improved infrastructures, pressure for government efficiency, transparency and the rebuilding of trust, increased demands for govern-ment services and an improved quality of life, and major reforms in education and health care – all coupled with falling tax revenues and shrinking budgets.

We need innovation, not triage 
Government leaders are doing their best to predict future needs and trends, but as the pressure mounts, agencies, departments and ministries are responding to the volatility in different ways. Initial positive reactions have resulted in improved infrastructures and faster responses to citizen needs – without much thought given to the underlying technologies that can provide long-term improvements. These types of solutions are often reactionary and what I refer to as Social Innovation 1.0.

In my experience, government organizations are reacting to the crisis in one of three ways:

1. Countries with knee-jerk reactions respond by halting programs or instituting cutbacks to alleviate anxiety, even if those actions negatively affect service levels for citizens or the competitiveness of the country.
2. Governments with a wait-and-see approach operate with a business-as-usual attitude, waiting for a return to normal. They do not acknowledge the new normal, and do not accept that the old times will not come back. In reality, today is the begin-ning of a new standard that might even be the beginning of a new world economy: the digital economy.
3. The third category is one where leaders and governments use this period as an opportunity to build for a stronger future, and prepare to better support citizens whose needs will undoubtedly increase.

In both developing and developed countries, governments in the third category have something in common:
They have started to capitalize on the digital economy and are using data to make decisions. It is my belief that analytics will open the door to the digital age. Analytics enables governments and organizations to increase their effectiveness, work more efficiently, and empower individuals and the organization as a whole.

This issue of Intelligence Quarterly includes many concrete examples of using analytics for building a stronger future, including:

• Predicting national energy use and reducing tax fraud in South Africa.
• Reaching climate neutrality in The Hague.
• Slashing public spending in Denmark.
• Reducing health care injuries and reducing health care costs in Sweden.

Social innovation and government transformation
To scale these types of solutions to a broad, widespread set of problems, government officials around the world are looking toward innovation as an all-encompassing solution. The World Economic Forum recognizes the potential that analytics can play in this area in its recent publication Enabling Transformation: Information and Com-munication Technologies and the Networked Society, which states:

As our world becomes increasingly interconnected, the potential for creating new forms of value grows exponentially as each new person and device is connected ... Whether it is upgrading the intelligence of the electric grid, predicting traffic jams before they happen or increasing the flow of information between patients and doctors, ICT is poised as a cen-tral element for a transformed and low-carbon society.

Your challenge as leaders is to focus on being proactive, and to re-imagine your current challenges as opportunities to build a better future.

As we enter the fabled digital age in its full capacity, with everybody carrying networked, mobile devices and organizations being inundated with data beyond their previously imagined capacities to store it, analytics will become the great enabler for Social Innovation 2.0 and government transformation.

By Social Innovation 2.0, I mean an era where the use of analytics in government can provide individual, real-time dialogue with each and every citizen, where citizen insight is not just about reports and figures but about inclusiveness and trust. It's about using analytics to drive true insight into the needs of citizens, with a focus on increasing efficiency and without compromising effectiveness. Ian Manocha explains how this can happen in the 1Q 2011 issue, and Michael Otten offers concrete approaches for improving government programs.

The ultimate goal is to meet citizen needs and expectations with less waste, reduced leakage and more efficiency. Closer interactions with citizens and a better understanding of citizen data can accomplish these goals while amplifying the voice of the citizen and making it easier for governments to capitalize on citizen ideas.

Learning from the private sector
What if we could improve preventative health care measures and allow patients to stay out of hospitals longer with an improved quality of life? What if we could be more proactive with our sup-ply and demand of energy on a micro level to allow for increased consumption while also reducing production? What if we could treat terrorist threats the same way we treat financial fraud and reduce airport screenings the same way we deny credit card transactions?

In these and many other areas of government, you can learn from the solutions that the private sector has already implemented using analytics. Individualized customer interactions in real time, supply chain optimization, risk management and preventative maintenance are all solutions that private companies have successfully deployed and governments can emulate through public-private partnerships and innovation.

The most important thing is not only to capture information and knowledge about citizens, but also to use it wisely and fairly to take action and make improvements in society. I am excited to see governments everywhere har-nessing analytics to propel themselves forward into the digital age, and I'm excited to see more leaders becoming advocates for analytics. They're not taking a wait-and-see approach or having a knee-jerk reaction to the current climate. Instead, they're using analytics to start building now for a better future.

As the global economy evolves and opens the door to what might become a new digital economy, leaders must ensure that citizens remain safe, that the quality of life improves, that appropriate responses are planned for changing demographic challenges, and that resulting regulation is pragmatic and embracing while also eradicating deficits. Analytics can serve as the entry point to capitalizing on data that is already available.

With these insights government leaders can not only remove current performance deficits, but also transform the public sector and prepare local economies to be more competitive – and do that in an inclusive and transparent way that builds trust and faith in the future.

The future is calling. Your leadership and your sense of innovation is the answer.

Bio: As the Executive Vice President, SAS Europe, Middle East, Africa and Asia Pacific, Mikael Hagstrom is passionate about providing a culture where innovation can flourish, resulting in market leadership both for the organization and its customers. He is responsible for optimizing business performance, delivering revenue and managing operations in more than 50 countries with individual P&L (profit and loss) centers and nearly 4,000 employees.

Mikael Hagstrom, Executive Vice President, SAS EMEA and Asia Pacific