Everyone agrees governments need to be more innovative, but systematically turning good ideas into practical change remains elusive.
UK expert Sir Geoff Mulgan CBE spoke at an ANZSOG event in Sydney last week, sharing insights from decades of work across public institutions, innovation systems and policy design.
“Innovation is absolutely essential if we're going to achieve the mission of a trustworthy government which is competent – and is seen to be competent - delivers for citizens, and is felt to be doing the things they want us to do,” he said.
“Our biggest risk in this environment, for governments all around the world, is the contrast between external fluidity - the global economy, geopolitics, social media and so on – and internal rigidity of bureaucratic institutions.”
“What I want to talk about is paranoia, hunger, and theft and why a little bit of all these things is actually essential to changing fast enough in the era we are now in.”
“It should be obvious that leadership is about having the courage to try things. But many leaders take an almost opposite view saying: ‘My God, let's not try anything, let's not risk anything and hope the world will go away.”
“The hunger to steal ideas, to borrow and adapt, is actually pretty healthy. I would ask any official, what have you taken recently? What are you adopting? What are you borrowing from the best in the rest of the world? You don't have to invent everything yourself,” he said.
He cited a recent Edelman survey of 25 countries, which showed government was generally seen as less competent and less ethical than business, NGOs, and the media.
“That’s kind of extraordinary. For me the big question is: how can government prove it's both competent and has integrity so it earns trust.
“It's a broader take on innovation – asking how we change fast enough to keep up with our environment.”
Re-establishing government as an innovator
Professor Mulgan said that many of the most transformative innovations of the modern era, from the internet to dramatic improvements in child and maternal health, were driven by public institutions. The private sector helped to scale and monetise interventions, but they built on foundations laid by governments willing to experiment, invest and learn.
In current times, the adoption of mass digital IDs in India and e-citizenship in Estonia are examples of technological innovation driven by governments.
“The OECD did a survey of 50,000 public servants around the world. They showed in their analysis that innovation climate is the strongest drive of organisational performance, but most employees don't think their organisations actually have a good innovation climate.” he said.
“If you want a high performing organisation - it's got to have a climate of innovation where people are developing idea, testing them and improving them.”
He said that successful public innovation follows a recognisable arc: sensing emerging challenges, generating ideas, testing them, scaling what works, and ultimately changing systems. The part where governments struggled, was embedding new approaches into institutions so that capability endures after individual leaders move on.
Professor Mulgan outlined three areas where systems must change:
Data and trust: creating ways to join up data for public value while addressing trust through stewardship, transparency and new intermediaries.
Regulation: shifting from static, compliance‐heavy models to adaptive approaches such as sandboxes and fit‐for‐purpose regulators.
Institutional design: moving beyond traditional hierarchies toward organisational forms better suited to complexity and long‐term challenges.
He warned that governments were battling to balance the risks and opportunities of AI, and to build real capability to govern AI use, rather than relying on vendor claims or isolated pilots.
“Almost no country has a team in the heart of government with the skills and the networks to really think through the AI stack, the industrial strategy, the issues around sovereign AI mean, and all these different things which are very complex and difficult.”
He said that public sector institutions were stuck in the past and weighed down by unnecessary process.
“My observation as a bureaucrat is that all bureaucracies tend to accumulate processes and paperwork. You've got to slash it back from time to time - otherwise, it just stops you being effective. It's not so much cost reduction as complexity reduction.
“Public institutions often literally look like they did 50 years ago, their insides and their organisational models are also pretty unchanged,” he said.
“How do we achieve the strength to solve problems, to use public power, but without the weight of bureaucracy of the 20th century models which we've inherited?
Improving the plumbing, learning from the paranoid
Professor Mulgan said countries that did government innovation well were often the ‘paranoid’ ones facing an external threat such as Sweden, Finland Taiwan. South Korea or Israel
“We tend to stagnate because we can get away with mistakes, but they can't. It's always useful to see what you can learn from the small paranoid countries. Australia isn't paranoid, and probably rightly so, but perhaps you need a tiny bit more paranoia to keep going,” he said.
He said that innovation was not just about big inventions – like AI or vaccines - but small accumulative changes in the way governments worked that maintained and improved efficiency.
“One of the things I do with officials from around the world is encourage thinking about little things like how you organise meetings, or structure teams, or do contracts.”
“Good government is a mixture of poetry, prose, and plumbing. Where the poetry is the big stories, the prose is the policy, but the plumbing is how you actually do stuff. That's often disregarded, and yet you don't achieve success unless you're good at plumbing.”
He said governments tend to spend around 1 per cent of their budgets on innovation, while big tech companies that dominate our lives take innovation really seriously and spend 20-30% of their turnover on it.
“You can get rich if you're a small country with loads of oil like Qatar. But otherwise, innovation is the only route to prosperity. It's the only route to driving up productivity.”
“Anyone who’s a public service leader should be accountable both for their present performance, but also how well they are doing for their successors. That's normal in science, it's normal in business, but often the public sector time horizons shrink and everyone focuses just on present performance, not on future accountability.”
The address sparked a thoughtful discussion, with a range of questions and statements from the public sector and academic audience.
Dr Vafa Ghazavi from the University of Sydney, highlighted a persistent asymmetry in public organisations: failure is punished sharply, while experimentation is rarely rewarded. In such systems, caution becomes rational, even when leaders espouse innovation rhetoric.
“We have people doing great stuff on a small scale, we have great visionaries trying to do some big ideas, but few who are working on that connection between the two levels,” he said.
Former DEWR Deputy Secretary Deb Jenkins said that framing innovation differently might get a more positive reaction from public servants, who could see the word as threatening or alienating.
“Effective innovation often looks like doing something slightly differently from the norm: sharing information earlier, codesigning with stakeholders, reducing duplication, or telling the story of public value more clearly,” she said.
“We also need to avoid replication. I cannot believe how every government department, state and federal, creates the same things. Why are we all competing? What is stopping us from actually saying I trust you to do that?
For more information on the event, check out the post event summary on the ANZSOG website.