Five lessons in digital transformation from a smart city

Amsterdam has produced more than 80 pilots as part of its Smart City initiative, enhancing its reputation as a hub for innovation.

Amsterdam has never 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 opportunities stood out:

• 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
• To experiment with, learn from and pioneer best practice in the application of data to help overcome urban and organizational challenges
• To harvest large volumes of data – on everything from energy usage to traffic volumes – that could be shared or traded with businesses and institutions to develop better or new services

However, despite the change of trading commodity, some ways of doing things never get old. Amsterdam’s early fortune was made by the combined efforts of private enterprise and the government, and the private/public partnership at the heart of this initiative could serve as inspiration for any city or organization aiming to get smarter.

Transforming Amsterdam into a smart city

“Amsterdam is not just any organization. It is a city of narrow streets, multiple canals and aging buildings, built for a different era. Modernizing was both an opportunity and a challenge,” says Frank Harmsen, Partner and Market Segment Leader for Government and Public Sector in the Netherlands and Belgium, EY Advisory.

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 initiative focuses on eight key areas:

● Smart Mobility (GPS data is being used to manage traffic flow in real time)

● Smart Living (The Green Living Lab)

● Smart Society (The “circular city” scheme aims at maximizing recycling)

● Smart Areas (Climate Street – discussed below)

● Smart Economy (the launch of the Mainport Innovation Fund)

● Big & Open Data (open data available for sourcing on data.amsterdam.nl)

● Infrastructure (re-negotiated green energy contracts)

● Living Labs (redeveloping areas where new projects can be tested)

The Amsterdam Smart City program’s success arose from several key features, which can serve as valuable lessons for any organization – or city – planning to make a similar transition.

1. Establish 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 “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. It takes time and perseverance to innovate. Long-term vision is hard to cultivate, but Amsterdam achieved it.

2. Grow a talent pool

One of the key challenges in a Smart City initiative — and in any major analytics strategy — is attracting and retaining talent. A lack of talent stifles innovation and keeps in place a pre-digital city destined to rely on tourism alone.

But here Amsterdam proved itself a leader. For starters, the Amsterdam Institute for Advanced Metropolitan Solutions (formed by the city’s CTO) helped get the right talent on board. 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. Keep customer needs at the forefront

Amsterdam’s Smart City managers have learned that even though they can make very sophisticated data presentations, consumers of that data ultimately dictate the best methods of communication. Utrecthsestraat, one of the most exclusive shopping streets in the city, has 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 city’s data analytics program helped them get these tailored solutions.

“Learning to listen to customers and cater to their needs is an essential lesson in analytics. Sometimes, even when ‘big data’ is available, small data will do, identifying areas for quick wins to secure further support,” says Harmsen.

4. Emphasize proof-of-concept projects

Amsterdam has produced more than 80 pilots as part of the Smart City initiative. These range from straightforward projects to grander strategies that involve entire communities.

Letting welfare recipients know when their payments are coming via SMS, for instance, was a simple but valuable change. At the other end of the spectrum, a scheme to have residents separate biomass from recycling streams to feed the city’s waste-to-energy power plant, 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.

And although time-consuming, the advantage of running a broad range of projects means ordinary people get to see the Smart City initiative working for them. Different parties across the city also get to work together, opening up new avenues and appetites for collaboration. The sheer number of projects also hedges against underperforming ones.

5. Build effective alliances

It pays to work with partners in data efforts. Amsterdam knows this, both when it comes to working with the city government, and outside of it. Inside, leaders such as Baron and Daan have worked to educate department heads on the benefits of data sharing – which requires established players to rethink existing practices.

Outside of city government, the private sector plays a key role, where stakeholders (and their data) across the community can be part of something larger. 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 crisscrossed 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.