How frugal innovation is helping governments deliver more with less

Governments worldwide face a quandary: They must satisfy the growing need for public services while also reducing public spending. The UK government plans to cut Civil Service running costs by 15% by 2030, for instance. And the French government, burdened with massive public debt, is facing pressure to curb its spending by €110 million by 2029.

Rather than opt for austerity – which is doing less with less by delivering fewer public services using less money – governments must follow the lead of the private sector and embrace frugal innovation, the art of doing better with less.

There are three frugal innovation principles that governments at national, regional and local levels can follow to deliver better public services more cost-effectively:

Rather than complain about the resources they lack – such as budget, talent, land and new technologies – public sector leaders must become more resourceful. They must valorize – that is, creatively extract more value from – the physical and intellectual resources they already have that may be less appreciated or under-used.

In 2021, the French government passed a law with the aim of “zero net artificialization” by 2050, to stop agricultural and forested areas from being turned into "artificial spaces" such as roads, buildings and other infrastructure. Because of this restrictive law, urban planners must learn to do more with less land. One frugal option is to reuse artificial spaces that have been abandoned. For instance, there are more than 14,000 wastelands across France that could be recovered and repurposed to host offices, housing, schools, hospitals and green factories.

In Val de Garonne Agglomération, a rural territory in Southwestern France, the local government has converted an industrial wasteland to host modest-size factories for industrial startups that are building a decarbonized economy. This includes K-Ryole, which makes electric bike trailers that can carry up to 350 kilos without straining the person riding the bike – making last-mile delivery both more sustainable and humane. Another company using this space, Aliénor Ciments, produces low-carbon cement using natural materials including pozzolans, which are volcanic rocks found in the local area.

To accommodate a population that's expected to exceed 700,000 residents by 2030, the Housing Innovation Lab (iLab) run by the US city of Boston is piloting innovative projects to increase the supply of affordable housing by creatively “densifying” existing spaces. The iLab has already successfully piloted the Urban Housing Unit which is a fully-equipped 400 square foot modular apartment. So far, the city has approved 17 projects to build these compact housing units in vacant or under-utilized spaces across Boston.

Today, governments build multiple digital infrastructures to improve the delivery of different public services. Unfortunately, each often serves only one use case. A frugal approach would involve building generic digital infrastructure services that can be mixed and matched like Lego bricks and applied to multiple use cases.

This is what India did when developing its digital public infrastructure (DPI). This set of foundational digital services are open source and easily accessible, secure, scalable and interoperable. The project aims to enable efficient delivery of public services, while also accelerating digital inclusion and driving economic growth by boosting e-commerce and B2B transactions.

India's DPI uses a biometric layer that can identify 1.4 billion Indian citizens. It also includes a payments layer that enables anyone to transfer money instantly using mobile phones. Finally, a data layer enables government agencies and businesses to share data securely and seamlessly.

Rather than reinvent the wheel, government agencies and startups in India can use this digital stack to rapidly and cost-effectively build and deploy apps in critical sectors like healthcare, education, agriculture, finance, transport and commerce.

The DPI has already helped the Indian government to earn more and spend less. By streamlining the collection of income tax and Goods and Services Tax (GST), for example, the government’s GST revenue increased 20% annually between 2018 and 2023. The DPI also saved the Indian government $41 billion by deleting fraudulent beneficiaries of government schemes and welfare services. The DPI is expected to play a key role in enabling India to become an $8 trillion economy by 2030.

US Founding Father Benjamin Franklin famously said: “An ounce of prevention is worth a pound of cure.” For governments, it’s more cost-effective to take preventive measures than deal with the dire consequences of a major issue later on. For instance, 85% of jobs that will exist in 2030 haven't been created yet. Unless governments worldwide identify these future jobs and proactively reskill 1 billion workers by 2030, they risk losing $15 trillion in global GDP.

Countries can learn from the Brazilian government, which proactively identified future jobs set to be created by the energy transition, especially in the industrial sector. It is now actively retraining workers with the right skills to take on these well-paid future jobs. Likewise, the “future-proof skills” project led by Federal Public Service Policy and Support (FPS BOSA) government agency in Belgium aims to proactively bridge the gap between the existing and future skills of Belgian civil servants.

And rather than regulate a new market after it is created – as European legislators scrambled to do when Uber arrived in Europe in 2011 – Estonia has set up Accelerate Estonia (AE), which is “making illegal things legal”. AE is a visionary government agency that proactively removes regulatory hurdles so local startups with innovative solutions can shape and lead major new markets and generate positive socio-economic impact. Estonia is currently changing its regulations to allow localized water recycling, for example, which will benefit Estonian startups such as Spacedrip, which is developing decentralized water reuse solutions.

Rather than cut public spending indiscriminately, governments must learn to think and act frugally.

By creatively valorizing all available resources, building cleverly on existing solutions and responding proactively to societal needs, frugally innovative governments can deliver better public services with less.