Five lessons in digital transformation from a smart city

Frank HarmsenBy Frank Harmsen, Partner, Government and Public Sector, EY.

Amsterdam has never been a city that has shied away from innovation. It was in Amsterdam that the groundwork for modern capitalism was laid, with the emergence of the first multinational companies and the evolution of stock markets from small-time lenders into muscular institutions capable of financing international enterprise.

But where once the city’s fortunes hinged on the return to port of a spice-filled frigate, growth now sails on seas of data. The capture, analysis and trading of huge troves of raw information is at the core of Amsterdam’s growth plans as it transforms itself into a truly smart city, fit to compete globally as a hub for business, innovation — and leisure.

The benefits of becoming a smart city are varied, but for Amsterdam, three clear opportunities stood out.

  1. To use data to make the city as convenient as possible as a place to live and work — making it an attractive destination for businesses and talented people
  2. To experiment with, learn from and pioneer best practice in the application of data to help overcome urban and organizational challenges
  3. To harvest large volumes of data — on everything from energy usage to traffic volumes — that could be shared or traded with businesses and institutions in order to develop better or new services

Transforming Amsterdam into a smart city

As with so many transformational initiatives, strong leadership and collaboration between stakeholders can make a significant difference. Amsterdam’s collection of vocal and independent stakeholders includes elected officials from varied urban and suburban districts, government department managers and a diverse group of businesses and citizens, from a population of nearly a million people. Getting these people to come together behind a single goal could have been challenging.

But come together they did. Setting the standard from modern urban stakeholder collaboration and innovation, they took their city’s vaunted history of public-private partnerships into the 21st century via the Amsterdam Smart City (ASC) initiative, started in 2009 to bring Amsterdam into the upper echelons of global connected cities.

The Amsterdam Smart City program’s success has been driven by several key features, which can serve as valuable lessons for any organization — or city — planning to make a similar transition.

1. Strong leadership and support from the top

Two men in particular are responsible for the success of the program. The first is Amsterdam’s CTO Ger Baron, dubbed “Mr. Outside” for his strong advocacy work and political skills in engaging city leaders and other stakeholders.

The second is Berent Daan, Amsterdam’s Director of Research, Information and Statistics, and previously a wethouder, (a kind of “city alderman”) for eight years, giving him invaluable insight into municipal politics. Daan is the “Mr. Inside,” to Baron’s Mr. Outside and, together with his team, implemented the development processes at the heart of Amsterdam’s transformation into a data-driven city of the future.

The backing of the political establishment has also been critical. Admirably, Amsterdam’s political leaders continued to pursue the Smart City project despite changes of administration, and despite the modest early results that flew in the face of pressure to show concrete benefits.

2. Growing a talent pool

One of the key challenges in a Smart City initiative — and in any major analytics strategy — is attracting and retaining talent.

Key to getting the right talent on board was the Amsterdam Institute for Advanced Metropolitan Solutions (formed by the city’s CTO). The institute is a university program dedicated to developing smart cities; it generates ideas that can be directly applied to Amsterdam while also making the city a hub for people more generally interested in using data to make a positive difference to the world.

3. Keeping customer needs at the forefront

Amsterdam’s Smart City managers have learned that even though they can make very sophisticated presentations of data, it’s the consumers of that data who ultimately dictate the best methods of communication. Utrecthsestraat is one of the most exclusive shopping streets in the city, and has now redubbed itself “Climate Street” after embarking on a green activity campaign.

The shop owners wanted to receive annual reports with simple personalized recommendations on how to reduce energy use, and the cities data analytics program helped them get these tailored solutions.

4. Emphasis on proof-of-concept projects

Amsterdam has produced more than 80 pilots as part of the Smart City initiative. These range from the straightforward to grander strategies that involve whole communities. Letting welfare recipients know when their payments are coming via SMS was a simple but valuable change. A scheme to have residents separate biomass from recycling streams to feed the city’s waste-to-energy power plant, and which saw remarkable success in participating households, required a much greater degree of collaboration. From the very big to the very small, this kind of granular approach to innovation turns the entire city into a lab.

5. Building effective alliances

It pays to work with partners in data efforts.

For example, tapping into grocery store data helped formulate and evaluate a city healthy eating campaign for children. And private insurance companies helped gather data on city areas that needed more mental health services.

While Amsterdam may be criss-crossed by canals, the Smart City is not an island. No single group of stakeholders in Amsterdam could do this alone. These partnerships highlight how, after more than 400 years as a center of business and enterprise, public and private bodies are still working together for mutual gain.

Read more in the MIT Sloan Management Review — available are an EY POV and case study.

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