“Gentlemen, we have run out of money; now we have to think.” - Sir Winston Churchill
Governments don’t have their own money - when they need to fund themselves, they dip their hands in to the pockets of citizens and businesses.
Cambodia takes 8 per cent of GDP through income and business taxes; the average for the rest of ASEAN is 14 per cent, not much different to India’s 17.7 and China’s 17 per cent total tax take. Elsewhere in the region, Australia takes just under 31 per cent, relative to 34.5 per cent in New Zealand, and 28 per cent in Japan. [Numbers taken from the Heritage Foundation’s rankings of economic freedom.]
Naturally there’s a limit to how much money citizens and businesses want to hand over to their government, and over the years that tolerance for taxation seems to have diminished. The average tax take has fallen globally since 2000.
Faced with a declining share of the public’s purse, government needs to embrace frugality as the ‘new normal’ - in fact there is even a term for cost-conscious innovation: frugal engineering. The term was coined by Carlos Ghosn, CEO of Renault and Nissan car companies: “frugal engineering is achieving more with fewer resources.”
Being tasked to do more with less is not new for most government departments, especially in the United Kingdom, Europe, and much of North America. But what is new is the belief that rather than being an obstacle to negotiate, straitened circumstances may actually be a taut springboard ready to catapult government services through transformation - that necessity really is the mother of (re)invention.
Don’t believe me? Just look at how Open Government has taken off since President Obama’s Memorandum on Transparency and Open Government (21 January 2009), and in the wake of the European Union’s Ministerial Declaration on eGovernment (18 November 2009).
These were explicit responses to the dilemma of Churchill’s opening quote; listen to the opening words of the European Union’s Malmo declaration: “We recognise that Europe is currently facing serious economic, social and environmental challenges. As our governments move to face and overcome these challenges, there is a growing expectation from European citizens and businesses for their governments to be more open … We will encourage the reuse of public data by third parties to develop enriched services that maximise the value for the public.” (My emphasis)
More recently, again in response to belt tightening, the Australian federal government is moving ahead with a new parliamentary workflow system to manage the flow of information from ministries to ministers to support greater scrutiny of the executive. The cost of taking apart the existing fragmented system, and reassembling it on a single, automated platform that connects together 41 key agencies - US$10 million. The expected savings are US$30 million, but the real transformation is in how the legislature operates.
Frugal engineering (or frugal innovation as it’s sometimes called) is not about cutting costs - it’s about thinking imaginatively about why processes are structured the way they are. Imagine breaking down a process in to its smallest constituent parts, and then reassembling it to achieve the same result - but with some of the parts left over. Government carries more ‘legacy’, in terms of hand-me-down infrastructure and processes, than anyone else - and is therefore the sector in which we can expect to see the greatest ‘frugal’ windfall.
Tied in to the concept of frugal engineering is the belief that the maximum amount of creativity comes from the bottom of the economic pyramid - that organisations which are able to tap in to the creative breadth of their teams, and more importantly of their customers/citizenry, are more likely to reassemble their services optimally.
So returning to the opening quote, the “we” no longer refers to government employees - it’s everyone. We’re all in it together. Of course it’s easier to write about than to do, so I’m very interested to hear of what you make of ‘frugal innovation’ in a public sector context, and whether you’ve found success of failure with the idea.
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