How public sector organisations can embrace a startup culture

By Woo Hoi Yuet

Pursuing digital innovation at scale means that the public sector’s organisational culture must change. Here are some lessons that governments can learn from startups, according to innovation expert Marcel “Otto” Yon.

Embracing a startup culture is one of innovation expert Marcel "Otto" Yon's recommendations for transforming public sector agencies around the world. Image: Canva

Digitalisation has been on the agenda across Southeast Asia for years, with countries crafting national strategies for digital government. 


Among them is Singapore, which has articulated its digital aspirations through the Digital Government Blueprint, aligning its public sector with the ambitious “smart nation” agenda. Amid the lofty ambitions and strategic blueprints, there is still an underlying tension between letting innovation thrive and grappling with traditional bureaucratic processes and the legacy of culture. 


GovInsider speaks with Marcel “Otto” Yon, founder of the security and defence consulting firm innovation@scale and the ex-CEO of the Bundeswehr Cyber Innovation Hub, the German military’s digital innovation unit, about his view that digital transformation demands an evolution of the very ethos that governs how the public sector works. 

From alphas to alphabets: changing organisational DNA 


In an era of digitalisation, governments worldwide are grappling with the challenge of transforming traditional, bureaucratic frameworks into agile, tech-savvy organisations. While they have made strides, public-sector innovation units tend to hit a glass ceiling due to the organisation’s traditional governance logic, says Yon. 


Digitalisation doesn’t just mean a simple technical upgrade. It’s a holistic transformation that keeps “coming back to this question of organisational DNA,” he says. This transformation revolves around multiple dimensions. 


Firstly, traditional organisational structures, rooted in functional expertise, must shift towards a mission-centric framework. In an age where data is at one’s fingertips, Yon argues that organisational structures, once created to organise information around expertise, do not serve the same purpose now. 


Rather, organisations should now be designed around shared missions with clearly defined objectives and allocated resources. Functional expertise will be found when needed.


Secondly, the governance logic of public sector organisations should no longer be based on a culture of ex-ante permissions, but rather on a culture of empowerment and accountability.   


“The public sector should adopt an investor mindset,” according to Yon. It means “investing dedicated resources – money, time, people – in an idea, and seeing how it works,”he  explains. 


It shifts from rigid, predefined processes to a more organic approach. However, this approach, he clarifies, isn’t laissez-faire. Instead, it's about resource mindfulness and strategic allocation. 


At its core it is about managing a project on a risk-reward curve, constantly making assumptions and generating data to validate such assumptions, versus attempting to plan and predict the exact outcome at the beginning of a project when seeking permission to start. 


Thirdly, a team-centric transformation is required. Yon urges a shift from a system built around a few strong individuals to a diverse and complementary team structure, or in other words, a transition from “alphas to alphabets”, from individual prowess to the collective power of teams. 


“I love the mantra of Singapore’s Defence Science and Technology Agency (DSTA): ordinary people in extraordinary teams,” Yon adds.


“We would all benefit if we saw more people working five years in government, then creating a startup, working as an academic, and then going back to the government,” he says, contending that diverse experiences can further the cross-pollination of ideas. 

Learning from startups

Yon previously cultivated an entrepreneurial culture in the German military, when he was CEO of the Bundeswehr Cyber Innovation Hub. Image: Marcel 'Otto' Yon

In a rapidly evolving technological landscape, governments can learn a thing or two from startups as well. While large public-sector research organisations often spearhead technological inventions, startups are better at introducing and scaling the technology, says Yon.

Large organisations and startups have different approaches toward risk, with the former aiming to eliminate all risk through meticulous planning.


However, such a model lacks the agility to cope with the inherent uncertainties and evolving demands.

“There are so many variables you cannot plan [for]… You need to change it all the time,” Yon says.


Contrastingly, startups that operate in a realm of uncertainty thrive on adaptability, experimentation and calculated risk-taking. Yon clarifies that startups de-risk by adopting an iterative process: they start small, test the market, and adapt based on user reactions. 


A successful transition entails moving from being a “good planner” to becoming a “fast learner”. He adds that “you need to build the system as you go along, and you will discover more insights as technology goes forward."


Yon previously shared with GovInsider how the German military cultivated a startup culture.

The role of leadership in innovation

The responsibility for effecting change, Yon notes, lies squarely on leaders’ shoulders. At the heart of leadership lies the ability to ignite passion and set the stage and psychological safety for innovation to flourish. 


“If an organisation lacks a culture of [bottom-up] innovation, it is, in reality, a failure of leadership culture. And developing the right leadership culture is the number one item in a leader’s job description,” he says.

However, he points out that aligning the team toward a collective vision is a challenging and continuous process. A strategy paper will not suffice in the VUCA world. An iterative, concerted effort of senior leaders and employees in co-creating the vision, executing it, learning and adapting it is needed. 


Yon and his partners at innovation@scale have developed a framework entitled “Agile Leadership Heartbeat” to help large private and public sector organisations to implement an agile and entrepreneurial culture throughout all levels of management.


If roadblocks arise out of communication challenges Yon suggests positive reframing. “We introduced a simple rule. You cannot say that [the idea] cannot be done. You have to say that I believe in it if conditions one, two, or three are met,” he explains. 


This fosters an environment that breaks down hurdles instinctively, allowing individuals to build on ideas rather than outright dismissing them. 


As governments embark on the journey of digital transformation, they must thus embrace a proactive culture, positioning themselves as architects of their own destiny in the digital age to drive innovation forward.