Digital transformation at two speeds: the Public-Private Knowledge Divide

by Maria E. Heyaca

I have spent the last six years assisting public and private organizations in their digital transformation (DT) efforts. With time, it has become evident that the private and public sectors experience DT in ways that are very distinct from one another, with differing drivers and success factors. Surprisingly, these fundamental disparities are frequently overlooked in existing business literature. This leads to a gap in knowledge and to the application of private sector concepts to public services which can sometimes be harmful.

Fundamental drivers

According to academic research, the main drivers of digital transformation include:

• changing customer behaviors and expectations,

• changes in the competitive landscape,

• new disruptive business models,

• the desire to stay competitive and generate new revenue,

• and regulatory changes (Osmundsen, Iden, and Bygstad, 2018).

Except for regulations, the majority of these factors do not apply - at least not directly - to public institutions. This means that unlike their corporate counterparts, governments and institutions often lack immediate incentives to embark on comprehensive digital transformation programs and reshape their operations through data and technology.

While mounting citizen expectations, calls for more responsible financial management, and events like the COVID-19 pandemic introduce some urgency, the absence of existential threats makes strong internal drivers vital in leading change, a situation that is often much more challenging to navigate.

The road to success

At the same time, practitioners identify four key determinants of successful digital transformation:

• an institution's agility,

• organizational cultures that are open to change,

• the establishment of cross-functional teams,

• and the acquisition of technical knowledge.

Here again, these principles must contend with the reality of the bureaucracy, stability, and inertia inherent to public sector institutions.

Distinctive roadblocks

Finally, with regards to obstacles, I have observed of the years some of the unique challenges faced by the public sector in their digital transformation efforts, mainly:

• the leadership not understanding the transformational power of data and technology and the fundamental organizational changes they require;

• a lack of recognition of the strategic significance of IT;

• politically-driven decision-making that impedes collaboration;

• selection procedures and public procurement rules that hinder the ability to get adequate support in an acceptable timeframe.

In practice, even the most motivated teams and officials frequently end up facing barriers that significantly delay, if not completely prevent, meaningful transformation. Consequently, rather than harnessing the full potential of data and technology, institutions fall into the trap of superficial digitization — merely automating manual processes without instigating real, fundamental organizational change.

Where knowledge falls short

Whereas private corporations have access to a wealth of relevant information guiding them toward digital success, the same is not true for the public sector. While some organizations like the OECD have contributed valuable tangible content, a noticeable void persists in both business and academic literature on this subject. Most business publications on the topic ignore many of the unique challenges faced by governments, NGOs and international organizations and do not offer actionable advice. This lack of comprehensive knowledge and understanding of the particular situation of the public sector hinders progress in effectively leveraging data and technology for transformative change.

Closing this gap demands collaborative efforts from practitioners, academics, and policymakers to share tangible advice, best practices, and tools. As we strive to empower public entities to overcome their unique challenges, let this a call (from my small corner of the DT world) for a comprehensive, accessible body of knowledge to support public sector innovators toward successful and impactful digital transformation.

Reach out to us for a discussion on we can assist your teams in effectively navigating this transformative change.

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