Why digital platforms make politicians unelectable

A large percentage of public services are more like EMI than Spotify, and it is a brave politician that will deliver this message

The think-tank Policy Exchange launched its Technology Manifesto this week, with political interest on display from across the board in the form of the Tories’ Nadim Zahawi, Labour’s Chi Onwurah, and the Liberal Democrats’ Julian Huppert, MP for Cambridge. 

The Policy Exchange document is good, and although there were one or two moans about omissions - a tech policy for women, for example - on the whole all three MPs were enthusiastic about its contents. As Onwurah pointed out, there is a certain voter cachet about technology to which we can expect more politicians to become attracted over time.

The audience were equally enthusiastic, with questions firing from all sides – from countering tax evasion by large tech companies to inclusion of the digitally unwilling/unable. So much so, in fact, that I did not get a chance to ask my own question, which was this:

The UK’s national global competitiveness is forecast to decline from just under 5% of world GDP around 2000 to 2.6% by 2028. To maintain our existing standards of public services against such relative decline, we need to have a serious and open public debate about how we re-organise our public service delivery models, or accept lower public service standards - we cannot continue to pretend that we can have both.

On the face of it, we hear many claims about ways in which tech and digital can be used to improve public services – indeed, one of the key recommendations of Policy Exchange’s manifesto is “using technology to power better public services” by “adopting a ‘government as a platform’ (GAAP) model”. So far, so good. 

And yet the move from US web guru Tim O’Reilly’s concept of “vending machine government” (put your taxes in, and select from a small number of centrally predetermined services) – pretty much what we have now – is markedly at odds with the emerging reality of GAAP. This “reality gaap” will be extremely difficult for politicians to bridge – and this is why.

Disrupting traditional industries

Platform-based business-models are inherently disruptive - they disintermediate traditional institutions that broker supply and demand, and extract rents for doing so. Ebay, Amazon, Mechanical Turk, Odesk, Lastminute.com, Skyscanner, Android, Spotify – there is an ever-growing list of web-enabled platforms that effectively provide a direct clearing house between supply and demand, enabling innovation, co-creation, evolution – and, of course, savings - within a vibrant, double-sided marketplace where the platform itself can become all but invisible.

However, all this good stuff comes at a cost for the disintermediated, such as Barnes and Noble, EMI, Blockbuster, or traditional travel and labour agencies – all of these business models are direct victims of platform-based business models, with human consequences in terms of retraining, restructuring, and lost livelihoods. 

The elephant in the room at Policy Exchange’s event was of course, “How will GAAP affect government’s business model?” The temptation in government seems to be to build - albeit digitally – rather than to ask what value government adds in the first place.

For example - Nadim Zahawi mentioned the scrapping of DVLA’s paper-based vehicle tax disc, which we can expect to disappear later this year, as a poster child of how public services can be improved as a result of digital. 

But this much-touted DVLA example misses the point entirely - vehicle tax could just as easily be collected by insurance companies, all of whom already provide online insurance details to the government, eliminating DVLA from the process altogether.

In relation to vehicle tax, at least, DVLA resembles video chain Blockbuster or the record companies, whose businesses were fighting a rearguard action against new, platform-based business models that made their existence increasingly irrelevant to the end consumer. 

The temptation in government seems to be to build - albeit digitally – rather than to ask what value government adds in the first place

Do I really care who collects my road tax, providing the process is policed properly? What value does DVLA add, and what rents is it extracting, from brokering this simple transaction? 

Digital business models

If you are a politician who wants to get serious about new digital business models for public services however, the problem is that no-one in DVLA will vote for you, just as Blockbuster wouldn’t exactly have encouraged Netflix. 

For the fact is that, whether you are private or public sector, HSBC or HMRC, digital business is fundamentally anti-corporate, and challenges established, top-down institutions by disintermediating them from the balance of supply and demand. 

Regardless of sector, if you currently benefit from this sort of organisation, digital business models will mean that you are no longer able to extract value - profits, salaries, pensions, etc - from this exchange.

There are very many public sector roles that cannot be disintermediated – particularly the caring professions and all those activities that involve face to face public service – since there is no extraction of value from the exchange of supply and demand by other people. These are the public services that will be relatively immune from GAAP. 

But the fact is that a large percentage of our public services are more like EMI than Spotify, and it is a brave politician that will deliver this message on the soapbox.

Mark Thompson (pictured above) is a senior lecturer in information systems at Cambridge Judge Business School, a key architect of the government’s open IT strategy, and strategy director at Methods Group.

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