Open Innovation and the Public Sector: Untapped Potential

“The reasons for not implementing Open Innovation are second-order: the inconvenient truth is that Open Innovation works.”  Robert Madelin Senior Innovation Adviser to the President of the European Commission (2015-2016)

Despite the broad consensus on the urgency to reform public administration in Europe and beyond, Open Innovation is still struggling to realise its full potential. Among the obstacles identified, the structural rigidity of the public sector and a mismatch between supply and demand are among the main causes of this delay. After the virtuous examples of the city of Amsterdam, which launched the Startup in Residence Program in 2015, or Sudan, which launched the collaboration between the Social Security Investment Authority of the Ministry of Labour and Social Development and the startups GIZ and Impact Hub Khartoum to innovate the agricultural sector, the time has come for Italy too to take the first steps in this direction.

A new paradigm

In Italy, Open Innovation is gradually gaining ground, marking a promising state of development. However, the path is not without its challenges. Despite the first steps taken within our country with Appaltinnovativi.gov and dati.gov.it, resistance and difficulties in overcoming traditional corporate and institutional structures remain. In this scenario, Lattanzio Business to Government was born as a venture development programme developed by Lattanzio KIBS in the context of Open Innovation. Its model would make it possible to reduce the inefficiencies that characterise the relationship between startups, innovative SMEs and the Public Administration. In a reality where communication between these two worlds is often inadequate or even absent, Lattanzio Business to Government thus proposes itself as the glue that unites supply and demand in the field of innovative services for Public Administration. To do this, its model interacts with numerous stakeholders: the aim is to develop a business logic that is beneficial to both parties involved. 

From Business to Government: an empirical investigation

Recently, in the context of the project’s evolution, it arose the willingness to answer a question: how could Lattanzio Business to Government contribute to reducing the obstacles that still limit Open Innovation processes in PA? At this scope, an empirical study was conducted involving more than 20 startups and incubators. Among them, 29% regarded the public market as primary, while a majority of 71% relegated it to a marginal role. Through qualitative interviews, Italian innovative companies were questioned on their relationship with the public administration, the limitations they find and the future potential they see in it. Encouraging data emerged: 90% of the interviewees expressed a willingness to collaborate with the public sector, both in the present and in the future, while only 10% seemed to ignore it in their business plans. These results certainly testify to the considerable potential and impact that such a brokerage would have on both markets. However, in order for this to be realised, it will be necessary to consolidate the relationship and it will be crucial to do so by respecting certain expedients, the same ones suggested by those who will be the future protagonists of this revolution.

The future evolution

The future of Business to Government looks like a “new era” of collaboration between innovation and public administration, capable of overcoming the barriers that have so far limited the diffusion of Open Innovation in the public sector. With a well-structured strategy and a shared commitment, B2G could revolutionise the PA’s approach to innovation. To achieve this, it will need to open up to partnerships with key players in the ecosystem and consolidate its credibility. However, thought must still be given to the timing of intermediation and relationship management. Both could prove crucial in determining the success or failure of the initiative and in facilitating the actors involved or not.