Comparing Technology Innovation in the Private and Public Sectors

Darrell M. West and Jenny Lu


Many argue that the private sector is more entrepreneurial and innovative than the public sector. Commercial enterprises—responding to market pressures and the need to stay competitive—incorporate new technologies into their operations as a way to boost efficiency and productivity. In contrast, government agencies don’t have customers in the traditional sense and aren’t required to show a profit on their revenues. Most public departments have multiple constituents, such as voters, taxpayers, legislators, administrators, the media, advocacy organizations, and nonprofit organizations. Still, to understand the real factors facilitating technology innovation and advancing entrepreneurship, systematic data evaluating innovation in business and government is needed.

The following paper evaluates the websites of leading U.S. corporations with state and national governments, grades their overall performance, and examines nearly two dozen features of digital innovation, including: personalization, interactivity, transparency, PDA access, disability access, language translation, number of online services, privacy, security, and user feedback. We found that many government websites lacked multimedia, interactivity, and personalization—key features that allow users to tailor information to their own needs. On the other hand, public sector agencies were more effective at providing disability access than commercial enterprises. When it came to privacy policies, public sector websites also offered stronger consumer protections than commercial sites.

Also included in this paper are interviews with key leaders from companies that have implemented successful strategies for developing and maintaining first-rate websites. We draw on their experiences to determine the keys to successful innovation.