Bureaucracy meets innovation, reimagining public sector transformation through product thinking

Government agencies have traditionally followed a project-based model. A policy gets passed, funding is assigned, and a project team is assembled to create a new system or process. While this approach can deliver specific outputs, it often misses the mark on addressing the actual problem. The result is a predefined solution that may not evolve with the needs of the people it serves.

Product thinking changes the starting point. Instead of working toward a fixed solution, it begins by identifying the user's needs. From there, teams deliver iteratively - adjusting and improving based on feedback and changing context. The focus shifts from outputs to outcomes, and that shift allows public institutions to move from one-off implementations toward sustained service ownership and continuous improvement.

Making this transition inside complex, structured government environments is not simple. It requires a mix of cultural change, alignment across departments, and a disciplined approach to implementation. But it is possible. And where it has been done successfully, certain patterns stand out - cross-functional collaboration, early stakeholder involvement, and a willingness to rethink how value is measured and delivered.

Government departments often operate in silos. IT works separately from legal, which works separately from operations, and so on. Product teams, by contrast, bring these disciplines together around a shared goal to deliver value to its citizens. 

One successful tactic is the early integration of compliance, legal, and security teams into the development lifecycle. Rather than being bottlenecks at the end of a delivery process, they become active collaborators from the start. This anticipatory governance approach speeds up delivery while reducing risk.

Another enabler is stakeholder training. At agencies like Rijkswaterstaat, training sessions have helped stakeholders and executives understand the benefits of product thinking and iterative delivery, building trust and creating internal momentum.

Bureaucracy is often blamed for slowing down innovation. Strict rules, legacy systems, changes in leadership, and outdated procurement models can all make things harder than they need to be. But none of those issues are permanent. The key is getting everyone on the same page about why change is needed. That shared purpose makes it easier to align goals across departments. From there, small wins, delivered quickly can demonstrate value and earn support.

Government innovation requires leaders willing to challenge the status quo and advocate for new approaches. In some cases, it means taking calculated risks and "just doing" within the bounds of policy and compliance.

Perhaps the most compelling reason for adopting a product mindset is that it centers services around citizens’ needs. In the healthcare domain, CIBG, which is the executive agency for the Ministry of Health in the Netherlands, consolidated four different legislative compliance systems into a single, integrated product for healthcare providers. The result of this “one-stop-shop”  allowed for not only better user experience, but also lower operational costs and easier data management.

This kind of consolidation requires a deep understanding of the user journey and flexibility: loosely coupled systems, modular architecture, and open data standards. These technical choices support long-term adaptability in the face of changing legislation or technology.

Legacy technology is often cited as a barrier to transformation, but wholesale system replacement is rarely viable. Instead, public agencies are finding success through modular design and incremental replacement. Product teams can prioritize legacy upgrades as part of the backlog, avoiding the trap of endlessly deferring foundational improvements. Meanwhile, evidence-based frameworks like EBM (Evidence-Based Management) allow teams to track real impact through value delivered, user satisfaction, and innovation potential.

The rise of AI adds both urgency and complexity to public sector transformation. While AI offers enormous potential for efficiency and service personalization, it must be implemented carefully. AI should be applied only when the problem is well understood and when the data quality and ethical standards are rigorously managed.

The best approach is to start small. Choose clear use cases, keep humans in the loop, and build on what works. Data quality, ethical standards, and transparency are all essential. So is building trust.

To modernize in a meaningful way, public sector organizations must move beyond project delivery and adopt a product mindset. This shift demands cross-functional collaboration, agile governance, iterative improvement, and above all, a relentless focus on solving real problems for real people. A product mindset allows governments to build sustainable, resilient, and responsive public services that meet the demands of a complex, fast-changing world and address citizen needs more readily.

Governments across the world are grappling with the dual pressures of maintaining compliance while rapidly modernizing to meet the evolving needs of citizens. During the “Bureaucracy Meets Innovation” panel, experts from the public sector came together to discuss how product management principles, agile practices, and data-driven strategies can help bridge the gap between bureaucratic structures and innovative digital services. This discussion offered firsthand insights into how government leaders are navigating complexity, driving transformation, and keeping users, both citizens and internal stakeholders at the center of change.

So before you head off on a well-deserved summer break, here’s a quick reminder of the key takeaways from our “bureaucracy meets innovation” panel discussion.