Complexity Economics and Government Innovation

By Bill Brantley
September 12, 2017

The federal government, through the General Services Administration (GSA), is piloting some projects involving innovative technologies. There are pilots for artificial intelligence applications, chatbots and blockchains. About thirty federal agencies are working with GSA to determine how to use the emerging digital technologies to deliver government services to citizens. It is the second round of technological innovation I have seen in my career as a federal employee. Like the first round of technological innovation, there is an over-emphasis on the “cool factor” of the new technologies and an under-emphasis on re-inventing agency business processes to support the new digital technologies.

The Federal Government Meets the World-Wide Web

I started my federal career in the summer of 1997 as a Presidential Management Fellow (then, the title was “Presidential Management Intern”). I began work at the Social Security Administration (SSA) in the Earnings and Enumeration Branch. This provided management analysis on the assigning and use of Social Security numbers. We were just experimenting with web sites and technologies like Microsoft’s Active Server Pages to produce interactive web pages.

After nine months at SSA, I rotated to the Office of Intergovernmental Affairs in the General Services Administration. I was fortunate to be assigned as support to the Clinton Administration’s Reinventing Government web site projects. I helped conduct one of the first surveys of how the federal, tribal, state and local governments used the emerging web technologies to provide public-facing government services. There were many impressive pilot projects, and the highlight of my Presidential Management Fellowship was an online database of innovative government web sites I created for the intergovernmental community.

I left the federal government in 1999 and did not return until 2008. Between 2000 and 2009, I pursued both an MBA in project management and a Ph.D. in Public Policy and Management. In my studies, I watched Web 1.0 become Web 2.0 and how governments worldwide adopted the new digital technologies. During these nine years, I read and wrote about the theories and methods for building the digital organizations. I continue to study and write about digital transformation as more are being discovered each day. However, there is one early influential work I continually turn to understand how organizations can effectively transform digitally.

Beinhocker’s Theory of Economic Evolution: Physical Technologies, Social Technologies, and Business Plans

In 2006, I read Eric D. Beinhocker’s The Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics. Dr. Beinhocker does a masterful job of re-making economic theory into a dynamic, evolving system in which innovation and knowledge build wealth. The centerpiece of his theory is how economic evolution works. Economic units called “Business Plans” (BP) compete in the market against each other to produce profits that allow the BP to survive and thrive. BPs comprise two types of technologies. The first type is “Physical Technologies” which are defined by Beinhocker as “methods and designs for transforming matter, energy, and information from one state into another in pursuit of goal or goals” (p. 244). The second type is ”Social Technologies” which are “methods and designs for organizing people in pursuit of a goal or goals” (p. 262).

According to Dr. Beinhocker, successful BPs have the right mix of physical technologies and social technologies that work together to effectively and efficiently execute the strategies and processes of the BP. The purpose of economic evolution is for BPs to continually refine the mix of technologies as the BPs interact with other BPs in the market.

Government Innovation as Influenced by Economic Evolution

Dr. Beinhocker’s economic evolution can also be applied to government innovation even though government projects are not market-driven. With government projects and programs, the goal is to effectively deliver government services with the most efficient use of federal funds. A government project/program BP with the optimum blend of physical technologies and social technologies will, theoretically, receive more citizen support and public funding than less-optimal government project/program BPs. The key is the mix of physical technologies and social technologies.

Finding the optimum mix of social technologies with the physical technologies is what I see missing in the federal government pilot projects involving the new digital technologies. For example, consider the implications for new social technologies inherent in implementing the physical technology of blockchains. A recent Gartner analysis suggests early blockchain success will be limited. It is not a problem with the physical technology. Rather, it is an issue with developing the appropriate social technologies around implementing and using blockchains. “The researchers [Joh-David Lovelock and David Furlonger] believe the technological challenges of blockchain are solvable in the near term. Radical changes in business processes and operational norms will take a longer time to manifest in a company or ecosystem, they said.”

It took time for agencies to change their business processes to use the technologies of Web 1.0 and Web 2.0. It could be argued that some departments in the agencies are still working out how to use Web 2.0 effectively. The new digital technologies projects can have more impact if there is equal attention paid to the social technologies and the physical technologies.

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Author: Bill Brantley teaches at the University of Maryland (College Park) and the University of Louisville. He also works as a Federal employee for the U.S. Patent and Trademark Office. All opinions are his own and do not reflect the opinions of his employers. You can reach him at http://billbrantley.com.

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