Unlocking Economic Growth through Strategic Communication and Stakeholder Engagement in Government Innovation
The 30-minute talk, promoted through his The Economics Show podcast, was inspiring, not just for his questioning but, more importantly, for Mariana's insight. Mariana conveyed a strategic vision of the value that innovation can help unlock in both the public and private sectors.
Innovation is the engine of economic growth, a transformative force capable of reshaping societies and driving prosperity. However, unlocking its full potential requires more than policies and investment.
As Mariana Mazzucato explained in her interview with Martin Wolf of The Financial Times, governments worldwide must adopt an entrepreneurial mindset to create an environment where growth can deliver for all.
Yet, innovation and unlocking the value that this can generate requires a specific culture and mindset. It needs specific strategic communication and stakeholder engagement to overcome the systemic barriers to innovation that have taken hold of both the public and private sectors.
What Governments need to see themselves as entities that create the ecosystem where private companies can prosper. They need to invest in new technologies and pump-prime both enterprises and entrepreneurs in order for them to succeed. However, this needs to be done using a venturing and corporate venturing culture where financial and/or regulatory support comes with both shareholder and other strategic returns. It is a government that can create a win-win environment for business, government and the wider public.
Listening to the interview and podcast, the following are some of the views that stood out to me regarding how governments around the world, their respective civil services, and their stakeholders can unlock the value of innovation and stimulate economic growth.
The Challenge: Barriers to Innovation in Government
In her conversation with Martin Wolf, Mazzucato identified several challenges that hinder governments from driving innovation effectively:
Risk Aversion in Civil Service:
“We have decimated a lot of government capacity, capabilities which we had for the Moon landing within the civil service with massive outsourcing,” Mazzucato noted. This reluctance to take risks stifles experimentation and reduces the public sector’s ability to lead bold initiatives.
This is an issue I have encountered in my over eight years of working with and supporting international governments, where major consultancies are relied upon to design and deliver projects and services, even though insight and capability exist within the civil services.
The culture of risk aversion has created a culture where blame can be passed onto consultancies if outcomes are not met, which highlights how failure is perceived.
Market-Fixing vs Market-Shaping:
Governments often see themselves as market fixers, intervening only to correct failures rather than market shapers proactively driving economic transformation. This narrow perspective limits the scope of public sector innovation.
Yet, as regulators, governments can create the ecosystem and market where businesses can grow and thrive.
Lack of Urgency in Addressing Challenges:
As Mazzucato observed, “We treat wars with urgency, but not societal challenges like climate change or health crises.” This inertia prevents the alignment of resources and attention required for impactful innovation.
Privatisation of Rewards:
“We socialise risks but privatise rewards,” Mazzucato said, pointing out that public investments often fail to deliver equitable returns to taxpayers. This imbalance undermines trust in public-private partnerships.
Again, this issue is repeated when financial and regulatory support results in limited returns to the taxpayer because of political dogma.
Mariana uses the example of the U.S. government supporting Tesla in 2010. Tesla received a $465 million loan from the U.S. Department of Energy, which it repaid by 2013.
Repaying the loan in 3 years initially sounds excellent. Yet, as Mazzucato points out, it would have been ‘greater’ if the US government had asked for, say, 3 million shares.
In 2010, Tesla’s stock was trading at around $4 per share (adjusted for subsequent stock splits), giving the company a market capitalisation of approximately $460 million.
If the U.S. government had negotiated for 3 million shares as part of the loan agreement, it would have acquired about 2.6 percent of the total outstanding shares.
As of January 3, 2025, Tesla’s stock price was approximately $410 per share, which valued those 3 million shares at $1.23 billion.
Certain countries think and negotiate like this, looking for medium to long-term returns.
Sovereign Wealth Funds like Saudi Arabia’s PIF and Singapore GIC are two examples that strategically allocate capital to sectors and regions that align with their long-term investment objectives, contributing to economic diversification and growth in their respective countries.
Strategic Communication and Stakeholder Engagement
To address these barriers and capture the opportunities of new technologies governments must develop a more strategic and entrepreneurial mindset that embraces strategic communication and foster dynamic stakeholder engagement.
Mazzucato’s insights offer a roadmap for achieving this transformation.
Communicate a Bold Vision
Mazzucato stressed the importance of setting clear, measurable goals: “Treat climate or health challenges with the same urgency as wars, with bold, inspirational missions.”
Strategic communication should articulate these missions, explaining their importance and demonstrating how they align with national interests.
It is critical to develop a compelling narrative that demonstrates the long-term benefits of innovation for economic and societal development, detailing the value that will be experienced when.
Engage Stakeholders Proactively
Mazzucato emphasised the need for governments to be “capable, entrepreneurial, and outcomes-oriented” to collaborate effectively with the private sector.
Engagement must be inclusive, ensuring all voices contribute to innovation. This can be done through:
Public-Private Partnerships: Establishing collaborative frameworks that leverage private sector expertise while aligning efforts with public objectives.
Academic Alliances: Work with universities to translate research into real-world solutions. For instance, partnerships with institutions can unlock breakthroughs in renewable energy and healthcare. Universities already support innovation through their venturing and tech transfer teams, supporting with the taking to market of academic research.
I engage strategically with stakeholders by linking businesses to governments and start-ups to investors. Establishing the right relationships is essential for unlocking value from existing innovations.
Foster a Risk-Tolerant Culture
Governments must embrace risk as an integral part of innovation. “Failure is inevitable in trial-and-error processes,” Mazzucato stated.
A culture that values learning from failure can unlock transformative ideas. Failure is only failure when no learning is taken from what hasn’t worked.
Build Institutional Capacity
“The Moon landing was possible because NASA had the capability and confidence to work with the private sector,” Mazzucato highlighted. Similarly, governments today must rebuild internal expertise to lead innovation.
Having teams mixed with specialists from the private sector can help create a dynamic environment and culture that is agile and focused on the outcome, whether tactical or strategic.
It is imperative that there are clear communications through and across the government to ensure that everyone fully understands what the expected delivery is and the part and role that they have to play.
The UK Government's Service Manual, created just over 10 years ago in 2013, is an example of a playbook created by learning best practices from digital service design and delivery.
Ensure Equitable Returns
Mazzucato argued that public investments should deliver tangible benefits to society. “Tesla was a success story, but the profits went entirely to private investors. Why didn’t the public sector capture any of the upside?” she rightly questioned.
A mindset and commercial culture need to be established so that the government can negotiate better terms from the public-private partnerships it enters into, such as equity stakes or profit-sharing models.
Additionally, intellectual property laws must be reformed to ensure public-funded innovations are accessible and affordable.
Mission-Oriented Innovation
One of Mazzucato’s key insights was the success of mission-oriented innovation, exemplified by the Apollo programme. “The Moon landing wasn’t just about aerospace,” she explained. “It was about solving hundreds of problems across sectors, from nutrition to software development.”
Governments today can replicate this approach by setting bold missions that cut across industries, such as achieving net-zero carbon emissions or eradicating preventable diseases.
What Governments Can Learn:
Set Clear Missions: Define goals with measurable outcomes, ensuring progress can be tracked and celebrated.
Break Down Internal Silos: Encourage cross-departmental collaboration to pool expertise and resources.
Incentivise Innovation: Offer challenge-based funding to the private sector, rewarding solutions that align with public missions.
Improve Communication and Engagement: Ensure that purpose and outcomes are clearly communicated and understood by all stakeholders to ensure that delivery can be secured.
A Call to Action
Unlocking the economic and societal value of innovation, as Mariana Mazzucato points out, requires governments to adopt an entrepreneurial mindset. This transformation hinges on strategic communication and proactive stakeholder engagement.
By articulating bold missions, fostering collaboration, and rebuilding institutional capacity, governments can position themselves as not just leaders but critically as enablers in innovation.
Equally important is cultivating a culture that embraces risk and ensures equitable returns for public investments.
With the right strategies, the public sector can catalyse transformative change, unlock economic growth, and address the grand challenges of our time.
And while the talk might be on strategy, the critical job is to establish a culture that changes the mood not just of the civil service, but of the nation.
If you would like to learn more about how strategic communications and stakeholder engagement support can unlock innovation then do get in touch.
