Israeli Innovation Leader Proposes Outcome-Based Funding Model to Reform Public Sector Efficiency
Avi Hasson, former head of Israel's Innovation Authority and CEO of Startup Nation Central, advocates for a new funding model to improve public sector effectiveness by focusing on measurable results rather than activities. In a discussion with Dr. Yossi Maaravi, Dean of the Adelson School of Entrepreneurship, and student Maayan Shnir, Hasson highlights a significant disconnect between Israel's fast-paced technological innovation ecosystem, which he terms "Impatient Innovation," and the public sector's traditional operation. He explains that government budgets currently finance actions such as training days or facility use without clear goals or impact assessments, leading to inefficiencies and a lack of accountability.
Hasson identifies a flawed incentive system where failures are punished with public criticism and audits, while successes rarely yield rewards or additional funding. This dynamic discourages innovation and makes it difficult to terminate ineffective programs. He illustrates this with the example of elderly loneliness initiatives, where large budgets are spent on activities without scientifically measuring whether loneliness or related health outcomes improve.
To address these issues, Hasson proposes a tripartite partnership model involving government, private sector, and modern philanthropy. Under this framework, government agencies set clear, measurable national targets, philanthropists fund pilot projects and absorb financial risks, and private companies or nonprofits implement innovative solutions using advanced technology. Payment is contingent on success: if pilots fail, the government pays nothing and philanthropists bear the loss; if successful, the government reimburses philanthropists with possible incentives and scales the program nationally.
Hasson suggests the Ministry of Health as an ideal starting point, given its robust digital health infrastructure and strong health funds, recommending an initial allocation of 2-3% of its budget to pilot this model. He emphasizes the strategic use of pilots to reduce bureaucratic resistance and notes challenges including measurement limitations, cultural differences among stakeholders, and deep-seated mistrust within the public system. To build trust, he advises starting with problems that have the highest likelihood of success to create a compelling proof of concept.
Concluding on a hopeful note, Hasson reflects on recent hardships in Israel and the region, expressing optimism about the younger generation's resilience and the country's progress. He underscores the potential for Israel and the Middle East to move beyond past conflicts toward innovation and constructive change, driven by strong human and ethical resources.
