Government agencies across the developed world face a familiar paradox. Despite unprecedented investment in digital transformation—America alone spends over $100bn annually on federal IT systems¹—public satisfaction with government services remains stubbornly low. The conventional wisdom holds that wholesale modernization is the answer. The evidence suggests otherwise.

When Silence Becomes Dysfunction

Large organizations, particularly government agencies, suffer from a peculiar form of institutional sclerosis. Teams operate in silos, communication flows poorly, and problems fester undiagnosed. This organizational quietude creates a vicious cycle: without regular informal dialogue between staff and customers, seemingly simple issues become shrouded in mystery and appear to require dramatic intervention.

The phenomenon resembles what economists call information asymmetries, but in reverse. Rather than one party hoarding superior knowledge, all parties—managers, frontline staff, and customers—remain ignorant of readily available solutions. The result is a collective misdiagnosis of organizational health.

The Modernization Fallacy

Faced with systemic dysfunction, government agencies typically reach for the most expensive tool in the shed: comprehensive modernization. These initiatives promise to rebuild entire systems from scratch, incorporating the latest technologies (artificial intelligence is now required) while training thousands of employees on new workflows.

Such projects exhibit the classic symptoms of what behavioral economists term "solution aversion"—the tendency to reject problems because the assumed remedies seem too costly or disruptive. Ironically, this leads to solutions that are both costlier and more disruptive than necessary.

The modernization impulse also reflects what might be called "technological solutionism"—the belief that complex organizational problems can be resolved through better software rather than better management.

The Track Record

The empirical evidence on government modernization is sobering. A 2025 Government Accountability Office report found that of the 10 most critical federal legacy IT systems flagged for modernization in 2019, only three had been successfully completed six years later—a 70% failure rate for even the highest-priority projects(2). Britain faces similar challenges: the UK's Major Projects Portfolio comprises 125 projects with a combined whole-life cost of £448bn, with a 2020 National Audit Office report finding that government programs "often encounter difficulties, taking longer and costing more than planned, and not delivering the intended aims, with significant and high-profile consequences”(3).

These failures share common characteristics: they discard institutional knowledge, create massive transition costs, and operate on the assumption that existing processes contain no wisdom worth preserving. The opportunity cost is enormous—resources devoted to failed modernization could fund hundreds of targeted improvements.

A More Efficient Alternative

Economic, management, and human-centered design theory suggests a more rational approach: treat communication as infrastructure and staff as internal customers requiring market research.

External communications represent the lowest-hanging fruit. Research from Nevada's unemployment insurance system demonstrates that behaviorally-informed messaging—brief, jargon-free, and realistic about timelines—can increase reader comprehension by 5% and efficiency in task completion by 4-5 times when compared with the original messaging(4) as well as in the IRS’ attempts to reduce likely errors in tax filings(5). The marginal cost of such improvements approaches zero; the benefits compound indefinitely.

Internal communications require more sophisticated intervention. Human-centered design research—ethnographic observation, structured interviews, collaborative problem-solving—functions as market research for internal processes. This methodology builds the trust necessary for staff to reveal inefficiencies they have quietly circumvented for years.

The Hidden Economy of Workarounds

Such research invariably uncovers what might be termed the "shadow economy" of government operations: elaborate workarounds that staff develop to compensate for systemic failures. One case study from the General Services Administration found an employee spending four hours weekly manually entering data because management policies from two different teams meant data from spreadsheets that needed to be synthesized both came to her desk locked down(5). Another project with the Veterans Health Administration showed that staff regularly had to block off hours of time to correctly enter data in a clunky, outdated interface(6).

These workarounds represent massive hidden costs—not just in labour hours, but in opportunity cost. Highly skilled civil servants spend time on data entry rather than policy analysis or customer service.

Unlocking Human Capital

The economic logic is compelling: removing friction from internal processes allows organizations to deploy human capital more efficiently. Staff currently trapped in mundane workarounds can focus on tasks that require judgment, creativity, and institutional knowledge—precisely the activities that justify their employment in the first place.

This reallocation effect generates positive externalities. When capable employees are freed from administrative drudgery, job satisfaction increases, turnover decreases, and institutional memory is preserved—all factors that compound organizational effectiveness over time.

The lesson for policymakers is clear: before embarking on expensive modernization programs, governments should exhaust cheaper alternatives. Better communication and targeted process improvements offer superior returns on investment than wholesale transformation. In the efficiency game, evolution typically trumps revolution.

 

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Footnotes:

(1) Federal spending on IT systems, IT Dashboard, Office of Management and Budget, https://itdashboard.gov/

(2) U.S. Government Accountability Office, "Federal Legacy IT Systems: Agencies Need to Maintain Adequate Documentation to Ensure Successful Modernization," GAO-25-107795, July 2025

(3) UK National Audit Office, "Lessons learned from Major Programmes," HC960, September 2020. 4-5.

(4) Nevada Department of Employment, Training and Rehabilitation case study, Behavioral Insights Team, 2024.

(5)Increasing voluntary tax compliance through outreach to clients of return preparers. Letters sent to clients reduced likely errors in tax credit claims. General Services Administration Office of Evaluation Sciences. 2023.