Productivity-driven Transformation Model

The pressure on public finances and citizens’ expectations for improved quality in public services require a significant increase in productivity across both the private and public sectors.
 
This memorandum (summary in English) outlines a practical operating model to ensure measurable productivity gains in public sector reforms that leverage data and artificial intelligence. The starting point is always a management decision on the purpose, objectives, and metrics of the productivity-driven reform. The conditions for success are created by strengthening capabilities, focusing on customer value, and leading the transformation. Finally, productivity benefits are realised in the organisation’s financial planning, and continuous improvement is ensured by utilising new technological opportunities.
 
The model works for both central government and municipalities. It can be scaled from individual services to broader collaborative networks. The model addresses well-known reasons why many AI projects today fail to achieve their productivity and growth targets. Therefore, Sitra’s Public Sector Productivity Programme uses this model to guide funding allocation and ensure effectiveness.

The productivity-driven transformation model in a nutshell

1. Define the focus, objectives, and metrics of the transformation: Decide what you want to achieve, which productivity you want to improve, and why. Establish baselines, lock in objectives and key indicators with timelines: what will change, by how much, and in what timeframe. 

2. Ensure the prerequisites for transformation: Make sure roles are clear, ownership is defined, and common principles are agreed upon. Ensure sufficient resources are available to build capabilities and lead the transformation.

3. Plan how productivity gains will be achieved: Identify which steps in the current work create value for the customer and how they should be transformed. Plan to eliminate unnecessary delays and introduce automation. Describe how resources will be shifted to higher value-added work in a way that is reflected in key productivity indicators.

4. Lead implementation: Choose a decision-making model for implementation that supports performance management. Make necessary decisions on a weekly, monthly, and quarterly basis regarding progress, stopping, or scaling. Consider which incentives would promote improved performance.
   
5. Realise gains and accelerate transformation: Accelerate productivity-driven transformation by directing freed-up resources to work with even higher added value. Leverage new technological opportunities for rapid and significant productivity improvement.