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Is innovation debt holding you back?

By Rebecca Christoforidis
Published February 22, 2023

If you’re asking yourself, “should I be concerned about innovation debt?”. Congratulations! You’ve taken the right first step.

What exactly is innovation debt? It is the cost an organization accrues trying to maintain and support legacy technology and systems rather than investing in more up-to-date ones. It refers to both the direct costs of maintaining outdated technology and the costs associated with lost opportunities due to the failure to innovate. The more time that passes without redressing the balance, the harder the challenge to overcome it.

The Cost of Innovation Debt

Technology and its users are in symbiotic evolution, or to put it another way, technology is constantly changing to keep up with society’s demands, and we return the favor by constantly adapting to use it, and the cycle goes on and on. The pace of this back and forth has rapidly escalated due to the global pandemic. Populations have grown to expect more and more digital service offerings. This has forced organizations, including the public sector to pivot quickly in order to keep up with the needs of those they serve.

Failing to invest in evolving technology incurs a technical debt while an organization tries to maintain old technology that is in efficient and ineffective. In a recent McKinsey report CIOs noticed a significant increase in tech debt over the last 3 years but have allocated only 20% of revenue to address the issue. The main areas affected are business strategy, architecture, IT talent and company processes.

In practical terms innovation debts can lead to:

  • Difficulty recruiting and keeping qualified staff
  • Declining productivity
  • Software that is incapable of keeping up with demands


Trying to “pay off” technical debt means diverting time and resources that would be better spent elsewhere causing an organization to fall even further behind.

Innovation also carries with it an opportunity cost. Choosing to maintain archaic technology rather than investing in new and improved ones can lead to negative perceptions. In the case of a city or a municipality, this could result in a failure to compete for and attract businesses or tourists to your community due to a perception of being outdated. This can lead to the lost opportunity in increased revenue from taxes and other income streams.

Defeating Innovation Debt

The logical consequence of knowing about innovation debt is knowing how to avoid it, or if it’s too late for avoidance, then overcoming it. To do this, a management strategy is essential.

A good first step is to establish a team or point person whose primary role will be to keep up with technological changes as it relates to your services. This was demonstrated at the start of the pandemic when companies with good contingency plans were quickly able to take their businesses online.

The other part of the strategy is to assess the current state of your technology and systems. The best way to do this is with a technology audit. This will enable you to identify areas in need of upgrades and to develop a plan to address them.

This can be done in a few different ways:

  • Replacing outdated technology with all new ones
  • Investing in technology that integrates with your existing systems
  • Outsourcing some functions or move to a far more adaptable, cloud-based solution

Another way to overcome your innovation debt, especially if you’re a public sector organization, is by innovating your digital services to keep pace with the needs of your community. We can help you with this one. Our latest product is an evolving digital platform that will transform the way you serve, connect, and engage with your residents.

The Govstack Digital Platform contains:

  • A flexible and robust CMS that puts you in easy control of all website content, navigation and functionality
  • An interactive tool to easily manage your events, both paid and free
  • A customizable forms integration that significantly cuts your service delivery costs by digitally collecting feedback and payments, and allowing your residents to transact business online
  • A personalized, citizen engagement portal that provides quick access to key information and services tailored to the unique needs of each resident, wherever and whenever they need it

Click here to book a demo, or contact one of your representatives to see how Govstack can help your organization get ahead of innovation debt.