Governments operate in an ever more complex and demanding environment. They are facing increasingly “wicked”, interdependent problems and, like the private sector, are having to adjust to both the challenges and opportunities presented by globalisation and rapid technological change. The effects of the financial and economic crisis of 2008 have put further pressure on governments to cut costs and increase value for money. It is clear that the traditional model of the state, with its rigid, vertical hierarchies or “silos”, is no longer adequate. Modern economies and societies require a more strategic, flexible public sector that can adapt quickly to change and draw on a broader range of views, knowledge and expertise in designing and delivering public policies and services.

Today’s complex economic and societal challenges, accelerating technological change and instant communication are forcing governments to adapt. The traditional structures, methods and even roles of the state are no longer sufficient for tackling complicated problems that cross sectoral and national boundaries. Citizens are also demanding a greater say in public policies and services, and expect them to meet their individual needs quickly and efficiently. At the same time, trust in government – and in institutions in general – has declined in many countries, making it even more difficult for the state to carry out needed reforms. Governments therefore need to become more strategic and agile, to identify looming challenges and adjust quickly.

This chapter makes the case for Agile Government, drawing on the concept of “Strategic Agility”, developed in the context of large private corporations. This chapter discusses options for taking up the agility discussion in a public sector context, drawing on the budget, human resources and information and communication technologies policy tools that are available to government.

One of the pillars of strategic agility is resource flexibility; that is, the ability to quickly and flexibly reallocate resources from one area to another when priorities or needs change. The overall trend in recent years has been to decentralize budgets and give more freedom to line ministries in managing their resources; this can create “information gaps” that may hinder resource flexibility for the whole of government. There are several mechanisms that can be used to introduce more flexibility, including top-down budgeting, spending reviews, performance budgeting and automatic cuts of productivity dividends. The 2008 financial crisis created a need for urgent action on fiscal consolidation in many countries, leading governments to re-centralise or fast-track, at least temporarily, some budgetary decisions. This chapter looks at lessons learned from the crisis in terms of budgeting, as well as the use of the above-mentioned mechanisms and their potential for increasing strategic agility.

Resource flexibility, one of the key elements of strategic agility, is not only about budgets, but also about ensuring that the right human resources can be acquired, developed, and deployed in line with shifting priorities. Recent reforms to downsize the public service workforce, coupled with constant pressures to contain costs and increase value for money, are leading countries to strive for leaner, more strategic public services. At the same time, it is important to ensure that budget cuts do not unduly compromise the quality of public services. This chapter looks at the various tools and strategies countries have been using to make the public sector more agile, including strategic workforce planning, skills and competency management, promoting greater mobility in the public service, targeted recruitment and hiring, using performance management and compensation as incentives, fostering diversity, and changing the public service culture.

Information and communication technologies (ICT) have the potential to help government foster resource flexibility and strategic realignment throughout the public sector. They can help the government adjust to changing demands and pressures, and even inspire new approaches to government functions or services -- through the use of cloud computing, mobile-based services and social media, for example. ICTs can also make it easier to adjust back-office operations to create more agile, citizen-centred structures. Online services can improve accessibility and convenience for users. Technology can help increase collaboration both within government and with external partners to improve results. Finally, ICTs in used in conjunction with open government data can help government become more open, agile and connected – which should lead, ultimately, to better overall public sector outcomes. This chapter describes current practices in countries as well as the challenges that need to be overcome to realise the huge potential offered by new technologies.

The concept of strategic agility was developed in the context of the private sector and builds on three key levers: strategic sensitivity, resource flexibility and leadership unity. This chapter looks at the interaction between the public governance approach and the private sector strategic management approach to see how the concept of strategic agility can be applied to a wide range of national and institutional settings. It discusses what governments need to do to become more strategically sensitive to emerging policy issues, to better align government policies and activities to shared objectives and the public interest, and to facilitate the timely reallocation of human and financial resources to emerging policy needs. It also discusses effective leadership in times of transformation and how senior executives can create shared visions in the public sector and sustain momentum for reform.