Government Must Embrace the Strategic Value of Open Data

July 2, 2014 6:30 am PST | Data as a Service

Editor’s Note: This article first appeared in the Spring 2014 issue of Open Innovation magazine.

Governments today face a series of formidable challenges that demand new ways of thinking. Budget constraints, mounting pressure to increase efficiency and reduce costs, and the mandate to provide more visibility for citizens into planning and decision-making processes are somewhere near the top of the list. Yet, embedded in these obstacles are enormous opportunities for governments to increase the value they provide to a range of constituents— from citizens and community leaders to businesses and academic institutions. More emphatically, the public sector has a once-in-a-generation opportunity to redefine its place in society as an enabler of innovation, a champion of social and economic progress, and a model of how to get things done.

The Need for a Radical Mind-Shift

Historically, governments have gotten mired in thinking that no issue is beyond their purview; that it is government’s job to support an ever-expanding menu of programs and projects, regardless of how well they might be equipped to provide them. Donald Kettl called this approach “vending machine government.” In this model, citizens pay taxes in return for one-size-fits-all services. As we have all seen, this purely transactional, mechanical mode of government does not work. There are many reasons why. Here are just a few. For one, it assumes government, even with the help of a select number of vendors, is capable of providing all of the answers to meet the needs of our increasingly complex world. Second, as a closed system, it limits innovation; it incentivizes proprietary solutions that are costly to develop and administer, and which are inflexible to change. Third, it demands almost no leadership or accountability from government and invites little public participation. Finally, related to all of these points, it is completely out of step with our modern way of life. It runs counter to the thriving shared-services economy that each of us participates in every time we book a reservation through Airbnb, use Lyft to get a ride, or look something up on Wikipedia. So if the vending machine model of government doesn’t work, what does? How should government reframe its role in an increasingly interconnected, digital world?

Government as Innovation Accelerator

If the modern economy has one central lesson, it is that being a connector and a catalyst is a really useful thing. Malcolm Gladwell, who is generally ahead of his time, wrote more than a decade ago in Tipping Point that connectors “link us up with the world,” bringing diverse resources together to generate new ideas and solve problems faster. This is an important lesson for governments to internalize and it is diametrically opposed to the vending machine model. Connectors do not promote one-to-one, transactional relationships; in fact, they go out of their way to broker conversations and relationships among people from vastly different circles. This much is clear. But how can government organizations best fill the role of coordinator? What resource can they bring to bear to facilitate connections, illuminate new approaches to familiar issues, foster collaboration, and drive better decision making? Forward-thinking government leaders have discovered that the data their organizations collect as part of their daily operations—311 requests, building permit applications, restaurant inspection reports, and an increasing volume of data from sensor networks—can be an extremely powerful connecting agent.  When thoughtfully collected and contextualized, these data elements form high-resolution pictures that can help unlock innovative solutions to age-old problems. In short, these leaders recognize the enormous strategic value of open data. Further, they have embraced the idea—ahead of their peers— that one of the most important functions of government in the twenty-first century is as an aggregator and disseminator of the high-impact, public information at their fingertips.

Solving urban problems creatively is another area where open data is creating new opportunities for innovation. For example, the Mayor’s Geek Squad in New York City applied some standard statistical techniques and nothing but open data to solve the mystery of the grease-clogged sewers from restaurants that dump cooking oil. A process that would otherwise take an army of inspectors and months of investigative fieldwork was supplanted by more clever use of publicly available data. By reimagining the role of government as a provider of valuable data and data services, these future-oriented leaders are helping to transform the way government actually works. The alternate model of the data-driven government yields benefits across the following four areas.

Economic Development

Governments all over the world, at the local or national level, are looking for creative ways to stimulate economic activity. Several government innovators are realizing the untapped potential of taking a catalyst role in the data economy. McKinsey, ina seminal global study (October, 2013), estimates the open data economy can unlock $3 trillion in annual economic value in the areas of Education, Transportation, Healthcare, Consumer Finance, Oil and Gas, Electricity and Consumer Products. They estimate that the potential value would be divided roughly between the United States ($1.1 trillion), Europe ($900 billion), and the rest of the world ($1.7 trillion). CapGemini, another global consultancy, estimates that the aggregate economic impact from applications based on open data across the EU27 economy is approximately €140 billion annually. If that feels too ‘global,’ consider the findings of The Wall Street Journal in a recent article titled “Open Data a Boon for Entrepreneurs,” which looked at the impact of open data on cities in the U.S. The Journal found that while the rate of new business formation declined nationally between 2006 and 2010, the rate of new business formation in Seattle – an open data city and a Socrata customer – rose 9.41 percent in 2011, compared with the national average of 3.9 percent. Other cities where new business formation was ahead of the national average include Chicago, Austin, Baltimore, and South Bend, Indiana. All of these cities have vibrant open-data programs.


Quality of Life for Residents

Take a look at your iPhone, or Android device and consider the beautiful array of apps you use every day. You might see Yelp, Google Maps, Uber, Zillow, and the odd Angry Birds game (for the kids, of course). While you may not see a government app, several consumer apps used by hundreds of millions of people every day, use open data to enrich their service and help people like you better connect their digital lives with the news and events taking place in their local communities. For example, Yelp uses restaurant inspection data to add a government health score to its restaurant ratings. If you live in New York City, you may use to warn you before you go into a restaurant that is about to be closed. When you are looking for a house, or a place to rent, you may use Zillow, a notable example of a technology startup flourishing on open data. That company established a successful business by creating a living database of homes across the United States fed by a range of sources, such as county records and tax data. Open data fuels quality-of-life innovations in ways only a government-as-a-platform business model can enable. Would government have thought of creating Asthmapolis (now PropellerHelath) to help asthma and COPD patients use open data to manage their condition? Would government have created consumer apps like Porch (for finding a local building contractor), OPower (to help lower your energy bill), or BillGuard (for tracking your spending and preventing fraud)? It isn’t likely. However, government did not have to “create” these services. It just needed to supply the data.


Data-Driven Governance

Improving governance, or simply the way government works, is one of the key strategies enabled by open data. It starts with a fact-based decision making framework. Beth Blauer likes to say that gut-based decisions are unnecessary in the era of abundant data, and can be quite dangerous. Data-driven governance should lead to improved performance and accountability. The adage “what gets measured, gets done” should encourage more government leaders to set clear, measurable goals for their organization, and rigorously track performance against those goals. Improving governance does not always mean using available data more efficiently. Sometimes, crowd-sourcing new data can create insights that were impossible to collect just a few short years ago. Consider for example, Cycle Atlanta. The app uses your phone’s GPS to record your routes in real-time, allowing the City of Atlanta to know which routes cyclists prefer. The app will also allow users to report problems along their route, such as potholes, obstructed bike lanes, etc. The information collected by the app will be used by the City of Atlanta to make strategic improvements to bicycle infrastructure.

Operational efficiency

By moving their information-sharing infrastructure to the cloud, government organizations can also reinvent processes, retire aging systems, and scale programs more easily. Through consolidation and re-use of IT assets, increased self-service access to information, and a reduced system maintenance burden, government organizations can save millions in technology and staff costs. A recent study by CapGemini found, “open data and access to real-time information saved over $1 million for the city of San Francisco in the US. The city’s Chief Innovation Officer announced in June 2012 that access to real-time transit data resulted in 21.7 percent fewer SF311 calls. This decrease in call volume resulted in savings of over $1 million a year.”CapGemini goes on to cite another example. “Openness also aids in cutting down on public expenditure as public bodies are made more accountable for financial discrepancies. For instance, in California USA, the state transparency portal (that cost around $21,000 to implement) saved the state over $20 million when visitors identified unnecessary expenditure. The savings came after visitors to the site noticed an audit that showed that many of the vehicles in the state’s fleet were not needed,” the study says. Most recently, the City of Chicago in their open data annual report, found one of the city’s agencies saw a 65 percent decline in FOIA requests as a result of implementing a proactive open data policy.

This vision is not a utopia. Forward-thinking mayors, governors, county administrators, and federal agency leaders have already started to bring this vision to life. Scaling this movement is the next phase. And it is already under way.



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