If government seeks to operate more like a platform, will it kill valuable platforms in its attempt to operate outside its own value proposition? As people talk about how government “should” apply more platform strategy, I get concerned about the “how”. Done poorly, this could not only waste tax dollars, but destroy value-creators in the private sector.

Platforms use “technology to connect people, organizations, and resources in an interactive ecosystem in which amazing amounts of value can be created and exchanged.” They’re like that friend who knows everybody. When you need something, they can connect you with someone who can help. Of note, the more people your friend knows, the more valuable that friend becomes. Because network effects generate awesome value.

In turn, government can benefit by operating more like a platform. Like the huge value created when Bezos required Amazon to use a platform approach to share information, if the government shared all its information in this way, it would create huge value in the public and private sector. Data.gov and other open data initiatives attempts to achieve this, but it’s still a disaster to try to sort through all that information. Imagine, though, if an elegant API existed to access all the data stored by cities, and if it worked across multiple cities. Companies like Socrata and OpenGov are working on that, but the data remains piecemeal, and it’s a disaster to try to do any external benchmarking across multiple cities. The point here isn’t to criticize — I couldn’t resist — but to point out the opportunities and the work remaining.

In class, we discussed the possibility of using platform strategy to reconsider tax filings. Because the IRS does such a bad job with its forms, Intuit created TurboTax, and now TurboTax online. Supposedly, Intuit also spends resources lobbying the government not to make a competitive product. My question is, if the government wanted to remedy this issue and create easy-to-use tax forms, how would it do that?

Do you acquire that SBU from Intuit? What if Intuit doesn’t want to sell? Do you create your own product? As a previous user of government technology, I don’t trust the government to create products. Try using DTS, the military travel booking service. I dare you. It’s awful.

If the government acquires the product/platform or builds one of its own, how would it maintain that product? Yes, I know people love talking about techies working for government, but good luck trying to compensate them sufficiently for long-term retention. The private sector pays handsomely for people with those skills, and they can create feel-good social impact on that side as well. In this scenario, you create a cycle of private sector creation, public sector acquisition, and then public sector mismanagement/destruction. Rinse and repeat. Remember, government isn’t inefficient because nobody had any good ideas before we magically came along.

It’s worth noting how platforms exist and how they make decisions about when to let developers capture value and when to acquire features for the platform. I stole this chart from Professor Geoff Parker, who uses it to explain

Intuit’s logic for when to allow third-party development and when to move things in-house. Just because something creates value doesn’t mean the platform should do it. The long-tail of the demand curve should always belong to third-party developers. Also, once certain features become sufficiently common across apps (the green sections), the platform should consider providing those, such as the digital sign-in example from class.

But if government acts as a platform, should it acquire the next-most-valuable apps? This is like Facebook acquiring Instagram. Or the IRS acquiring Turbo Tax. I think not. Government’s function is to provide public goods where social value can be created but insufficient market opportunity exists. Using the chart, government should acquire/create green products, but not red, and it should always evaluate whether it needs to create the blue. This relies on my opinion that what the government does best is “as little as possible to create the maximum possible value.” There’s probably a good argument here for public-private partnerships, but I’m still working on that.

So, yes, government can act more like a platform and create huge value. If public servants start trying to replicate and acquire other platforms or products, though, that would be self-defeating. Instead, we should try to organically build open eco-systems, organizing information and operations in a way that facilitates platforms, because if the government starts trying to capture platforms and market opportunities, it will likely kill them. For any public servant who thinks they know better and can buck the system, please start with DTS first. Then the MBTA. Then world peace.

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