Bizzaro Budgeting and Public Sector Innovation

Why is it so hard for governments to adopt innovative new technologies?

Why does the public sector lag so far behind the private sector in leveraging new technology to create efficiencies?

As an organization that works at the intersection of government and technology, these are questions we hear a lot at Code for America. Through our various program offerings, we are working to address the popular sentiments – and the underlying issues – that cause these questions to be asked so frequently.

Many observers point to the government procurement process as the chief impediment to adopting new technologies in government. I’ve made this same observation myself, and public sector procurement is an area ripe for reform and new thinking.

But looking more globally at the incentives that drive how governments apply resources to acquire technology we can see another area where reform is badly needed to encourage innovation – the public budgeting process.

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What Does A Civic Startup Look Like?

In my last post, I made reference to some of the qualities of civic startups – the special and important things about these kinds of small, agile companies that set them apart from other startups.

I think clarifying what civic startups are (and what they are not), as well as what we expect them to achieve is important.

Let me be clear, I have great respect for anyone who creates a startup. I have many friends in the technology community who either have, are or will work for a startup company. I do not mean to suggest that civic startups are, generally speaking, “better” than other kinds of startups.

What I mean to emphasize is that civic startups have particular qualities that make them attractive to both governments and citizens. Both parties have an interest in seeing these kinds of startups succeed because both will realize benefits when they do.

Let me explain.

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Five Things Governments Can Do to Encourage Civic Startups

2012 is shaping up to be the “Year of the Civic Startup.”

With the growth of the open government movement and more and more governments embracing open data, we see an increasing number of useful civic applications being developed.  Every weekend hackathon spawns multiple projects that could potentially live on as a successful venture or company.

Some hackathons are specifically geared toward producing viable companies – this is exactly the approach that was taken at last November’s “Education Hack Day” in Baltimore.  At that event, the idea was to set up winners with as much expert advice and opportunity as possible to launch a business around their weekend project to help teachers.

Generally speaking, a “civic startup” is a startup company with a focus on civic improvement or social good.  They look and act just like other kinds of startups, but their aims are somewhat loftier.  ElectNext and SeeClickFix are a good example of a civic startups – their aim is to become profitable and viable (just like other startups), but if these ventures are successful they will impact people far beyond their direct customer/user base.

Everyone benefits when voters are more engaged and participate more regularly in elections, or when city neighborhoods are cleaned up.  We all get something out of the success of civic startups like ElectNext and SeeClickFix , whether we use them directly or not.  In this sense, we can describe these kinds of startups in economic terms – civic startups are those that generate a positive externality.

Some civic startups are direct consumer of open government data, like RailBandit which uses data published by public transit agencies.  Other civic startups – thought this type seems especially rare – might potentially offer goods and services directly to governments through the standard procurement process.

There are ways that state and local governments can help startups and encourage the startup community.  Some governments (usually at the state level) provide early-stage funding for technology companies – the Maryland Venture Fund is a good example of this.  State and local tax policy can also be used foster and encourage high tech startups.  But these options have become more challenging for governments in recent years because of financial strain and tight budgets.

In 2012, I believe that state and local governments will connect the dots on open data and begin to see it as a viable economic development tool for encouraging the development of new businesses and the creation of civic startups.

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