Deloitte: Disruptive innovation can help cash-strapped governments deliver more for less
Disruptive innovation has the potential to make public programs radically cheaper without slashing services
Some of the potentially disruptive innovations available today can achieve cost savings of up to 75 percent for governments
New York, 23 January 2012 —Today, we hear a steady refrain from politicians and pundits across the globe to 'do more with less.' Unfortunately, the inevitable result of budget cutting tends to be 'less for less.' A provocative report from Deloitte Touche Tohmatsu Limited (DTTL), Public sector, disrupted: How disruptive innovation can help government achieve more for less, outlines an alternative path: disruptive innovation as a way to break the seemingly unavoidable trade-off between paying more and getting less.
'To get more for less requires doing things differently. From security to education, from health care to defense, we need innovations that break traditional trade-offs, particularly between price and performance,' said William Eggers, Research Director, DTTL Public Sector Industry. 'Disruptive innovation offers a proven path to accomplish this goal, and transform public services in the process.'
This report represents the first major attempt to apply the groundbreaking concept of disruptive innovation across a number of diverse areas of the public sector. Areas the report examines include:
• The criminal justice sector: Low-level offenders, who make up more than 60 percent of the U.S. prison and jail population, could be placed under house arrest with the supervision of an electronic monitoring device. The average daily cost of incarcerating a U.S. prison inmate in 2008 was US$78.95, while the potential average cost of daily electronic monitoring was US$15, resulting in cost savings of 75 percent.
• The defense sector: Unmanned Aerial Vehicles (UAVs) cost a fraction of the price of manned aircrafts and satellites and provide several key performance capabilities: persistence, flight longevity, undetected penetration, the ability to conduct remote operations with fewer combat personnel, and the ability to operate in dangerous environments without putting pilots in harm’s way.
• The education sector: Online learning—a blended learning environment of digital and traditional instruction—can potentially break the trade-off between standardized teaching and the more personalized instruction that a student might receive from a tutor. Additional cost savings would be incurred in the areas of faculty, resources, and infrastructure. Cost savings from blended learning have averaged 39 percent, with some course costs reduced by as much as 75 percent.
As outlined in the report, the framework for introducing disruptive innovation in the public sector has three principal components: focus (identifying what needs to be accomplished in the short and long term), shape (deciding how and where to start the disruption), and grow (protecting and nurturing the growth of disruptive technologies through the use of government tools and channels).
'Disruptive technologies can transform whole industries and create entirely new markets and business models,' said Paul Macmillan, DTTL Global Public Sector Leader. 'For these disruptions to take root, they must be fostered and promoted. Governments have an array of tools, such as legislative reforms, alternative funding models, and new partnerships that can be used for this purpose.'
To read the full report, go to www.deloitte.com/govdisrupted
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