The Role of Public-Private Partnerships in Innovation

by | Jul 22, 2012

Earlier this week, we took a look at the INSEAD report titled Global Innovation Index. The report looks at innovation practices right around the world in greater depth.

Of particular note in the findings is the report’s chapter called The Role of Public-Private Partnerships In Innovation.

Public-private partnerships are forged when public and private resources are pooled in a mutually beneficial endeavour. These relationships have grown in importance over time as walls are broken between public bodies and the corporate sector.

The links between the public and private spheres has a long history in the US, where political leaders have long supported private entities in order to further scientific research and development. France also has these kinds of relationships to thank for the metro system in its capital: the tunnels were constructed by public authorities while a Belgian entrepreneur footed the bill for the tracks, energy, signalling and other equipment.

Today, contracts between the private and public sector see risk, reward and responsibilities shared between the two parties.

Public-private partnerships generally take place in one of three forms:

  1. Private sector takes ownership of a public service or asset through a public listing or an equity partner
  2. The government grants a long-term franchise agreement to a private company
  3. A government business is privatised

As cities all over the world struggle economically with rapidly growing populations, they must pursue an interconnected form of problem-solving. Private sector innovation is beneficial by using the strength of information communication technology (ICT) to make services provided to cities run smarter, more efficiently and more cost-effective.

For example, the e-Mitra project in India saw the state of Rajasthan deliver documents such as birth certificates, forms and other information electronically thanks to dedicated centres and kiosks.

These types of partnerships are crucial in the technological innovation sphere as they help to ensure the competitiveness of countries and regions. The European Commission is taking steps to make sure risks and responsibilities are shared by the public and private worlds, making these ventures legally sound to encourage links between governments and corporations. It has encouraged these partnerships to be formed through the use of grants, public procurement and investment.

Public-private partnerships can help governments become a little more creative and think outside the square by operating outside government processes and systems, which helps drive innovation.

Jeffrey Tobias

About Jeffrey Tobias

Dr Tobias is an accomplished innovation consultant and entrepreneurship strategist, drawing expertise from the academic, entrepreneurial and corporate worlds. Jeffrey’s commercial and business experience is particularly focussed on lean startup, design thinking and leadership. Prior to The Strategy Group, Jeffrey was Cisco’s Global Lead for Innovation in the Internet Business Solutions Group helping Fortune Global 500 companies improve customer experience and grow revenue by transforming how they do business.
Jeffrey is a professor of innovation and entrepreneurship teaching MBA students at the Australian Graduate School of Business at the University of New South Wales. An active angel investor, Jeffrey is on the board of various well-known startups.

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Managing Director, The Strategy Group

Dr Tobias is an accomplished innovation consultant and entrepreneurship strategist, drawing expertise from the academic, entrepreneurial and corporate worlds. Jeffrey’s commercial and business experience is particularly focussed on lean startup, design thinking and leadership. Prior to The Strategy Group, Jeffrey was Cisco’s Global Lead for Innovation in the Internet Business Solutions Group helping Fortune Global 500 companies improve customer experience and grow revenue by transforming how they do business.
Jeffrey is a professor of innovation and entrepreneurship teaching MBA students at the Australian Graduate School of Business at the University of New South Wales. An active angel investor, Jeffrey is on the board of various well known startups. Jeffrey’s corporate background includes leading global innovation strategy at Cisco, working with large corporates such as Adobe, Westpac, Telstra, Woolworths, and Perpetual.

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