State entities too complex to be treated as startups

Around the world, governments are trying to reinvent themselves in the image of business. Elon Musk’s DOGE crusade in the United States is quite explicit on this point, as is Argentina's chainsaw-wielding president, Javier Milei. But one also hears similar rhetoric in the United Kingdom, where Cabinet Office Minister Pat McFadden wants the government to foster a “test-and-learn” culture and move towards performance-based management.

- MARIANA MAZZUCATO RAINER KATTEL

The problem is that governments and businesses serve vastly different purposes. If public policymakers start mimicking business founders, they will undermine their own ability to address complex societal challenges.

For startups, the highest priority is rapid iteration, technology-driven disruption, and financial returns for investors. Their success often hinges on solving a narrowly defined problem with a single product, or within a single organisation. Governments, by contrast, must tackle complex, interconnected issues like poverty, public health, and national security. Each challenge calls for collaboration across multiple sectors, and careful long-term planning. The idea of securing short-term gains in any of these areas doesn’t even make sense.

Unlike startups, governments are supposed to uphold legal mandates, ensure the provision of essential services, and enforce equal treatment under the law - more important today than ever. Metrics like market share are irrelevant, because the government has no competitors. Rather than trying to “win,” it should focus on expanding opportunities and promoting the diffusion of best practices. It must be long-term minded, while achieving nimble and flexible structures that can adapt.

Introducing a new digital health app within a weak health-care system may offer incremental improvements, but it will not address underlying systemic issues, like a shortage of medical workers or geographic challenges. Worse, if startup logic is applied to public services, it could lead to piecemeal solutions that exacerbate existing inefficiencies. For example, a city might create an app to report potholes, gaining quick wins in citizen engagement. However, this doesn’t help the city to consider more sustainable transportation systems and lower carbon emissions that impact citizens’ health.