This post is a submission to the TxP Progress Prize, in answer to the question ‘Britain is stuck. How can we get it moving again?’.
‘You can’t teach an old dog new tricks’ as the saying goes. But throughout the ages of the world, Britain has learned plenty of new tricks. The Metropolitan Police Service evolved out of the Marine Police Force, the first modern police force. The establishment of the NHS was a world-first for the welfare state, in support of a new post-war settlement in Britain. Oxford and Cambridge are the second and third oldest in the world, and have taught British leaders and officials for centuries.
But we stopped building new institutions, and since we have had nothing to fight back against the sclerosis we see today. If we want to learn new tricks, I believe we need some new dogs in the race. Britain needs a philosophy of building new public institutions for the 21st Century. It’s time for venture statecraft!
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Institutional failure
The need for new institutions is more obvious when we consider how well the existing ones are fairing at their core objectives. The Covid-19 Inquiry is uncovering fundamental flaws in the health service’s preparation for a pandemic. The Met Police remains rocked by the murder of Sarah Everard, struggling to get a grip of its own workforce - over 1,000 officers are suspended or on restricted duties. And whilst our universities remain one of our greatest exports, at home their influence is significantly diminished by a culture war imported from America and unsustainable financing.
In his 2020 paper Great Founder Theory, Samo Burja suggests that functional institutions are the exception, not the norm, and that even highly functional ones tend to decline and fail. They lose sight of the goals they had, lose the leadership of the founders that made them great, and fail to adjust to a changing world.
Much like natural selection in evolution, or creative destruction in the markets, organisations are more commonly replaced by new ones than saved through reform. To extend the comparison - systems which allow their constituent organisations to be replaced will be more resilient than ones which expect those same organisations to endure indefinitely.
For all that our leaders have wanted Britain to be a startup nation, with a private sector to mimic Silicon Valley, we have neglected that same kind of dynamism within the public sector. Those institutions I have described as innovations in their own day- the NHS, Met Police, professional armed forces - still persist with remarkably similar business models, and their replacements are nowhere to be seen.
Attempts at reform
Instead of replacing them, successive governments have tried to ‘reform’ them, and for the most part have failed. The dogs have not learned new tricks. I began my career as a civil servant in the Home Office in 2015, when it was still reeling from being declared ‘not fit for purpose’ by Home Secretary John Reid in 2006. The scandal he was referring to was a massive asylum backlog - the same kind of backlog as the one left uncleared this week. The same is true of wasted billions spent on NHS software, long delayed armoured vehicles, and schools where we literally didn’t fix the roofs whilst the sun was shining.
This isn’t a surprise when we consider the scale of changes we’re expecting these organisations to make. Imagine an economy where we relied only on existing companies to provide new services. Where the Macbook was built by IBM, Facebook by BT, Monzo by Barclays. It’s inconceivable - but that’s exactly what our public sector looks like.
Established institutions face what Clayton Christensen called The Innovator’s Dilemma - market-leading businesses are so focussed on their current customers that they miss changes in the makeup of the market which call for radically different products. Eventually disruptive technologies are created by challengers to create these products, pushing out incumbents. But we don’t see the same forces at play in the public sector. When Robert Peel founded the Metropolitan Police Service in 1829, there was no internet, but now that it exists fraud & computer misuse are the most common crime types in Britain.
There is an alternative
We need to spend less time trying to reform our public institutions, and more time replacing them. In contrast to these stagnant areas, the parts of Britain where we have built new organisations are the ones we see the most dynamism!
The free schools movement was incubated by the Conservatives in the opposition years, then came to life in government - harnessing naturally entrepreneurial teachers and parents who wanted to build alternative school choices. The Vaccine Taskforce was lauded as a world-leading approach to procurement, but only because it was removed from the usual Whitehall processes and could work independently.The Advanced Research and Innovation Agency (ARIA) hopes to replicate this model in science funding, having been legally separated from the rest of government interfering by an Act of Parliament.
Venture statecraft is the answer
Venture statecraft applies some of the principles of venture capital (VC) to the public sector. The economy escapes the Innovator’s Dilemma when small startup companies disrupt the business model of incumbents, often using new technologies (software, hardware or humanware) to provide better products. To challenge incumbents, they need investment.
Venture statecraft rests on two pillars:
Investing in new institutions. Just like venture capitalists, the government has a big enough balance sheet to manage the risk that some of those investments may fail. Over time, as they prove they can take on frontline responsibilities, these can be transferred from incumbents to their replacements.
Empowering people at the edge of networks instead of the centre. Whitehall and most other institutions are still run by small groups of people whose whole careers are spent within them, particularly those who operate at the ‘centre’ of them - in Whitehall, those who worked in 10 Downing Street, the Cabinet Office or the Treasury. It’s easier to bring in new blood and new ideas with a new organisation which doesn’t have the same baggage.
Modern VC began when Arthur Rock funded eight ‘traitors’, scientists fed up with poor management at the Shockley Semiconductor Laboratory - liberating them to pursue their own ‘adventure’, and pioneer integrated circuits and transistors in the process. How many great teams are constrained by our current bureaucracies, and could be liberated by venture statecraft to serve the public good? The only way to know their names is for us to try.
We don’t need a Venture Statecraft Strategy, or a Cabinet committee, or an independent review. These new institutions will only be birthed by the hard labour of doing. The last government’s manifesto promised a new “cyber crime police force” - we should establish it. As Large Language Models upend education, why don’t we establish a new AI-first free school to embrace new models? Most military strategists believe drones will have a much bigger role in the future - rather than trying to fit them into existing structures, the MoD should establish a new front-line command to specialise in autonomous systems and new kinds of warfare. It’s time to (re)build.