This article is written by Oleksandr Akulenko, Chief Product Officer at Prozorro.Sale.

  • The problem: Inefficient systems, outdated technology and bureaucracy hinder public sector organisations. Traditional management approaches may not solve these issues, resulting in limited innovation, slow responses and suboptimal outcomes.
  • Why it matters: The public sector provides essential services to citizens, and its effectiveness directly impacts the life quality of millions of people.
  • The solution: Government agencies can improve agility, customer-oriented practices and data-driven approaches by adopting product management principles and practices, ultimately leading to better outcomes for citizens and more efficient use of public resources.

Electronic auctions through Prozorro.Sale have had a huge impact on Ukraine, bringing over $2.1 billion to various budgets and facilitating more than 100,000 successful transactions, including real estate transfers during the war. This success is attributed to the adoption of modern product management approaches from the commercial sector, effectively adapted to the public sector.

Implementing product-based approaches allows Prozorro.Sale to prioritise user needs and maintain a strong partnership between government, business and civil society, known as the "golden triangle". By integrating various functions like IT, legal, marketing, business and finance, the team creates well-balanced products, synchronising ecosystem development with the state-owned enterprise's comprehensive vision and strategy.

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In product management, the focus remains on identifying, developing and constantly improving solutions to deliver value and enhance user experiences. While the essence of a product remains consistent across public and business sectors, the priorities, such as social impact and policy compliance, tend to vary. These nuances, from my perspective, make product management in the public sector both challenging and profoundly impactful.

Balancing user-friendly solutions with regulatory requirements

In the public sector, effective stakeholder management becomes crucial as organisations must balance the diverse needs of citizens, government and policymakers. Open communication and engagement with partners are prioritised to cultivate trust and navigate complex decision-making processes.

To allocate resources effectively, prioritisation frameworks are essential. Regularly we need to balance competing stakeholder interests and prioritise them based on factors such as urgency, impact and strategic alignment. Prioritisation frameworks like Value vs. Effort, Risk vs. Reward, RICE, Weighted Decision, etc. help to decide which features or requirements are most crucial and thus allocate resources accordingly.

It is crucial to remember that we make products not just to implement what is written in the law, but to achieve certain goals and keep the focus on customers and citizens.

Another aspect of operating in the public sector is the impact of legal restrictions and regulations on the final product. Public organisations face the challenge of navigating complex regulatory landscapes and ensuring compliance with various laws and policies, which can be more stringent compared to the commercial sector. In each market and project, we use cross-functional teams, where product and IT teams work closely with the legal team.

While legislation may seem restrictive, it serves as a framework for creating user-friendly products that meet regulatory requirements. Public sector product managers strive to find optimal solutions that align with both regulatory guidelines and user needs. At the same time, we must remember that creating products in the public sector is a marathon, not a sprint.

Commercial businesses have a more agile and flexible organisational culture than the public sector, allowing them to adapt to market changes and make quick decisions. On the other hand, the public sector's hierarchical and bureaucratic environment may result in slower decision-making influenced by political factors. It is crucial to remember that we make products not just to implement what is written in the law, but to achieve certain goals and keep the focus on customers and citizens.

To foster innovation and responsiveness, product management approaches play a crucial role. By promoting cross-functional collaboration and user-centricity, organisations can enable faster and more informed decision-making. Rather than solely focusing on legal requirements, the emphasis should be on achieving specific goals with customer and citizen interests in mind. This approach ensures the delivery of high-quality results, while collaborative decision-making enhances outcomes at all levels of product development and implementation.

Efficient resource allocation: Funding and financial constraints

Product management approaches assist public sector organisations in prioritising features and allocation of resources more effectively, ensuring that projects and products are delivered within budget constraints. Utilising hypothesis generation, validation techniques, experiments and pilot projects allows organisations to test assumptions without overspending time and money or before moving to full-scale countrywide initiatives.

A key aspect of successful public sector product management is focusing on solving specific problems for customers and reusing existing solutions whenever possible. It is better to solve a specific problem for specific users and then scale up than to try to create a universal solution at once, wasting a lot of valuable resources. For instance, Prozorro.Sale's success in Ukraine was attributed to its initial focus on the sale of assets from bankrupt banks, followed by successful scaling to other markets.

Long-term support and resource allocation are crucial, since maintenance may require more resources than the initial launch. Sometimes, it is more profitable to have a strategic vision and proven hypotheses before taking action and consciously deciding to halt certain activities or remove functionalities that do not bring sufficient value to users and the organisation. This forward-looking approach is key to maintaining product sustainability and efficiency.

Contrasting risk and innovation approaches: commercial vs. public sector

In comparing commercial sector organisations to public sector counterparts, one striking difference lies in their approach to risk and innovation. Commercial businesses embrace innovation with higher risk tolerance, while public sector organisations prioritise stability and risk mitigation due to their accountability for taxpayer funds and potential social impact.

In the public sector, product implementation follows a cautious and strategic approach. Before expanding nationwide, organisations test their solutions in specific market segments, work with early adopter companies, or implement the product in certain regions to minimise risks and gather valuable insights before full-scale deployment.

To identify high-impact, low-risk innovations, public sector product managers adopt task prioritisation strategies. Collaborative decision-making processes involve key stakeholders, gathering diverse perspectives to make informed choices. Despite fewer resources compared to commercial companies, the public sector's emphasis on risk management fosters steady development and informed decisions.

One more approach is using performance metrics, which play a vital role in measuring success and evaluating the impact. For instance, at Prozorro.Sale, the Net Promoter Score (NPS) serves as an indirect indicator of trust. Other metrics like average bidders per auction, a percentage increase in minimum selling price, and the proportion of successful auctions provide valuable insights into product effectiveness.

In the public sector, traditional product metrics are adapted to focus on specific areas. For ‘Acquisition’, the emphasis is on the target audience's awareness or access to the service. ‘Retention’ is measured through user engagement and consistent usage, ‘Monetisation’ is replaced by "cost-effectiveness" or "value for money," reflecting the efficient use of public funds and delivering intended value. Organisations can further enhance transparency and trust by making relevant metrics publicly available, as exemplified by the summarised data on Prozorro.Sale through the public analytics module bi.prozorro.sale. A holistic understanding of performance metrics throughout product development enables public sector organisations to adapt and improve their offerings.

At the same time, product managers can help public sector organisations navigate competitive landscapes and identify opportunities for collaboration. Collaboration becomes a key strategy for public sector organisations to overcome the lack of direct competition. Engaging in market research and stakeholder engagement allows them to identify collaborative opportunities with private entities, non-profits and other public organisations. By creating synergies and achieving shared objectives, the impact of public sector products and services can be maximised.

The public sector operates under the influence of political factors, with government leadership changes and policy shifts significantly impacting strategic direction, resource allocation and decision-making. Prozorro.Sale's experience demonstrates the resilience of a product in the face of such changes. Despite three Cabinets of Ministers being replaced, the focus on quantifiable benefits for the country and building user trust has contributed to its stability, further bolstered by collaborations with businesses, NGOs and international initiatives.

Implementing the previous points is not a panacea, but it helps to move forward regardless of political influence. If you solve specific problems, bring value and you can show it in numbers – you will be trusted.

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(Image credit: Unsplash)