**RAFAEL LAGUNA DE LA VERA:**
Government can change law. Government can put a lot of money into initiatives—often more than any rich individual could do. In fact, government is actually required to scale businesses.
**FREDERIK BLACHETTA:**
There are always theories arguing that governments are the problem. I would really love to see governments change that view and become true drivers of innovation.
**RAFAEL LAGUNA DE LA VERA:**
The big questions of our day are global. And it doesn’t really matter who solves them as long as they get solved. The first breakthrough innovation is us. We’ve invented a government agency that acts very differently from others.
—
**LIZZIE O’LEARY:**
Across the world, it’s not just the private sector seeing an opportunity for innovative growth. Governments are also stepping into the fold—helping accelerate big ideas across industries, fostering new partnerships, and improving lives.
**FEMI OKE:**
So, could the world’s next big breakthrough innovation be driven by government?
**LIZZIE:**
And what does that mean for how the public and private sector work together?
**FEMI:**
I’m Femi Oke, a broadcaster and journalist.
**LIZZIE:**
And I’m Lizzie O’Leary, a podcaster and journalist. This is a special series of *Take on Tomorrow*, the podcast from PwC’s management publication, *Strategy and Business*.
**FEMI:**
Today, we ask: what’s the role of government in driving innovation, as we look at how we Govern and Serve?
**LIZZIE:**
To explore the relationship between business and government today—and how it might evolve—we’re joined by Frederik Blachetta, Public Sector Data & AI Leader at PwC Germany. Frederik, welcome to the show!
**FREDERIK:**
Nice to be here.
—
**FEMI:**
We often discuss the private sector’s role in innovation on this podcast, but why should we pay attention to governments in this space?
**FREDERIK:**
Several reasons. Historically, many groundbreaking innovations—such as the smartphone’s haptic touch—wouldn’t have been possible without government funding and risk-taking. Early-stage innovations are complicated and risky, and governments can help close that gap.
**LIZZIE:**
Before joining PwC, you worked within government at the German Federal Chancellery. How has government traditionally worked alongside businesses, and do you see shifts in these relationships?
**FREDERIK:**
It’s important to challenge the stereotype that governments are slow—big corporations can be slow too. People in government often have a strong mission to improve society. We’re seeing a move from governments working in isolation toward capability-driven ecosystems where the boundaries between public and private sectors are thinner, allowing cooperative and flexible collaboration. Governments are leveraging private sector capabilities to operate better, and this partnership is essential.
—
**LIZZIE:**
Thank you, Frederik. We’ll return to you shortly to hear more. First, Femi, you’ve been learning about Germany’s government focus on innovation.
**FEMI:**
Yes. In 2019, the German government established SPRIND—an agency dedicated to creating breakthrough innovations to address social and economic challenges. I spoke with Rafael Laguna de la Vera, SPRIND’s director, to understand why the agency was formed.
**RAFAEL:**
Germany excels at basic research but struggles to translate it into new industries. While we improved incrementally since the 1870s, most new breakthroughs came from the US or China. In 2017, the government decided it was time for change, and that’s how SPRIND was born.
**FEMI:**
Is this related to the ‘valley of death’ after basic research?
**RAFAEL:**
Exactly. For deep tech especially, a lot of money is needed before a product reaches the market. Private financing is smaller in scale and expects quicker returns—typically within a few years. Projects like building a fusion power plant may take 15 to 20 years, requiring someone to bridge that financing gap.
**FEMI:**
How does SPRIND work with businesses?
**RAFAEL:**
We use specific parameters to identify breakthrough potential. The first step is to assess the team—do they have high potential individuals? We support them until they reach an industry or private finance audience. Annually, we host Venture SPRIND, where 300-400 investors attend to hear pitches from about 50 teams. When private industry shows sufficient interest, we step back.
**FEMI:**
How do you know when it’s time to step away?
**RAFAEL:**
It’s simple—we check if the team has enough funding. If their purses are full, we leave. Tax money isn’t needed when private sector interest exists.
**FEMI:**
So SPRIND acts as a catalyst, de-risking projects to match private sector risk appetite?
**RAFAEL:**
Exactly. You can think of us as their innovation department.
**FEMI:**
What unique advantages do governments have that the private sector lacks?
**RAFAEL:**
Governments can change laws, allocate large amounts of capital, and are required to scale businesses in a coordinated way. However, we could improve on how we orchestrate these efforts.
**FEMI:**
What limitations does SPRIND face?
**RAFAEL:**
As a government agency, we operate under strict rules. We created the ‘SPRIND Liberty Law’ in 2023 to allow more flexible work. Budget constraints are always a challenge, and international collaboration is another.
**FEMI:**
Which ideas supported by SPRIND have achieved significant success?
**RAFAEL:**
We’ve supported over 250 projects. For example, we are building the world’s tallest wind generator—300 meters high—with enhanced energy stability. Other projects include treatments for Alzheimer’s and various cancers, water cleaning technologies for microplastics, and CO2 capture using ocean algae. Science drives wealth and well-being, and there’s no end in sight if we apply and scale it.
**FEMI:**
Are projects chosen based on their positive impact on society?
**RAFAEL:**
Absolutely. We use tax money—from the people—to fund projects that benefit the many, not innovations serving only a select few. Monopolies that favor few are not something we finance.
**FEMI:**
How does SPRIND engage with the private sector?
**RAFAEL:**
It depends on the project maturity. Early on, partnerships may be with charities or government bodies. As projects progress—like in Alzheimer’s drug development where phase two costs around €90 million—we engage with industry, such as Big Pharma, to ensure funding and approval for later stages. We coordinate this so that once the initial risk phase is over, private capital is ready to scale.
**FEMI:**
Your projects cover many basic human needs. Can you give examples related to mobility, health, construction, food, or energy?
**RAFAEL:**
Energy is fundamental; I call it the ‘father of breakthrough innovation’. Abundant, green, and cheap energy would solve many issues, including clean water production. That’s why we invest in nuclear fusion, massive wind generators, and energy storage solutions. Renewable energy needs reliable storage because it’s intermittent. Overall, science can solve many current challenges if we successfully apply and scale innovations.
**FEMI:**
Could other countries replicate SPRIND’s model?
**RAFAEL:**
We consider ourselves an open-source agency. The challenges we face are global, so who solves them matters less than getting solutions. SPRIND leads by example, showing how government can operate differently. It would be fulfilling to see similar agencies worldwide tackling global issues.
**FEMI:**
What if every country had a version of SPRIND collaborating internationally?
**RAFAEL:**
That could transform society. Take longevity: living healthier longer raises societal challenges around wealth creation and distribution. Huge investments into AI, sometimes in competitive silos, risk creating monopolies. If innovation agencies globally coordinate to ensure benefits reach all people, wealth abundance could make society freer—we can choose work less driven by money, with affordable food, water, and energy. Of course, significant societal development is needed, and such agencies could be a good starting point.
**FEMI:**
Thank you, Rafael, for sharing your optimism and insights.
**RAFAEL:**
It was a pleasure, Femi. Thank you.
—
**LIZZIE:**
Frederik, Rafael described the SPRIND model, but there are other ways governments and businesses collaborate. Can you share examples of effective partnerships?
**FREDERIK:**
True collaboration requires mutual benefit. The European Union’s innovation partnerships are a good example—they tackle complex problems without knowing the final solution upfront. User-centric approaches are critical, especially in digital and AI sectors.
**FEMI:**
In this series, we’ve discussed new capital and partnerships needed to drive innovation in the next decade. Can this happen without government involvement?
**FREDERIK:**
That’s tough. Some argue governments are the problem, but I believe governments must become innovation drivers. To do so, they need to openly share challenges and priorities. The success of federal data and AI labs I helped build relied on cross-ministry collaboration and top-level oversight. Piloting new projects, accepting failure as learning, and iterating are essential. Innovations like SPRIND are changing government culture toward this approach.
**LIZZIE:**
How important will disruptive technology be in driving needed innovation?
**FREDERIK:**
Governments, especially in Western democracies, currently lag behind private experiences in technology. This gap is widening. We must adopt disruptive technologies and accept associated failures in a portfolio approach. Doing so will unlock solutions for bigger challenges.
**FEMI:**
For governments in developing countries with fewer resources, what can be done?
**FREDERIK:**
It’s crucial to develop and share disruptive technologies accessibly. For example, the United Nations promotes open-source AI to prevent new technological divides, enabling these tools to help everyone globally.
**LIZZIE:**
Looking ahead ten years, if we get the balance right between government support and private innovation, how will society be impacted?
**FREDERIK:**
A realistic hope is that people fully trust governments’ use of technology and partnerships. A moonshot vision would be bi-partisan agreement on the value of collaborative multi-stakeholder approaches. In Europe, public-private partnerships have declined but could serve as blueprint models again—greatly improving how we live together.
**FEMI:**
Thank you, Frederik.
—
**FEMI:**
Lizzie, my big takeaway is that I don’t always see governments as instigators of innovation. But with the right mindset and environment, they can truly kick-start ideas that might never have emerged without early support and risk-taking.
**LIZZIE:**
Absolutely. The key theme is partnership—leveraging the unique strengths of government and private enterprise to benefit society in ways that may initially seem unintuitive but prove powerful.
—
That’s it for this episode of *Take on Tomorrow*. If we’ve inspired you to think about your business in new ways, please follow *Take on Tomorrow* wherever you listen to podcasts. For more information, visit [pwc.com/takeontomorrow](https://www.pwc.com/takeontomorrow).
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