“Procuring the future: the public sector as change agent for startups.” (Blog IV)

This week, at the Mobile World Congress in Barcelona, the largest startup competition was held on mobile technologies and new business models. At the venue for startups 4YFN (#4YFN @4YFN_MWC) hundreds of stands showed the latest on robotics, shared economy, m-commerce, smart cities, healthcare or alternative education. And even celebrations were in order, since the Dutch Utrecht based startup Whatsonplanner has won the Global Mobile Challenge! Congrats, Jelle! Fantastic achievement!

Barcelona was not only a pool of inspiration for geeks, investors, business, but also for government. Yes, government. Just translate these opportunities into e-government; 5G infrastructure, social inclusion or m-health and Big Data based policy. Looking at public procurement, for instance, the opportunity to innovate public services for society, economy and infrastructure is only about to start. Public innovative procurement is an instrument that can potentially make the difference.

The public sector could procure the future, if it wants to. Annually hundreds of millions are spent in the Netherlands by the public sector on the public sector. The timing is perfect to increase the impact of public procurement. We are facing societal-economic challenges and technological opportunities like never before. Let's aim to combine them into a new marriage, including a central role for startups. And let's not accept arguments that this would be too risky. That startups don't have a track record. The real risk for society lies in not allowing innovation to take place. Working with startups requires a new approach. From the government it requires an attitude to manage risks the right way: towards innovation. And not the wrong way: away from innovation by excluding the most forward looking minds. Governments can play such a key role in speeding up innovation. They can reduce barriers in public procurement and buy products and services from startups. Governments can act as launching customers and give innovation, jobs and growth a tremendous boost.

Already in the Netherlands we have such great examples on the local scale. For instance Tvilight (intelligent streetlight) in Utrecht, Rotterdam, The Hague and the island of Texel. Besides supporting Texel’s vision on being energy neutral and creating a safe haven for wildlife, Tvilight’s solution will elevate Texel to become Europe’s first ‘Smart City’ ready island. The Dutch Ministry of Healthcare is organizing sessions for startups on how to scale up and how to involve them in innovating the healthcare system from within.

But there are more possibilities and opportunities. For instance by organizing public procurement hackathons! Invite the brightest minds for a new outlook on public issues, which matter to us all. Perhaps as a follow up to NWO's National Science Agenda? (Hans de Groene, director NOW and Alexander Rinnooy, National Science Agenda). Not only invite the innovators when the projects are defined, because these mostly incorporate traditional thinking. Involve them at an early stage.

The national government, and also from the perspective of the EU, the public sector could give an important and decisive boost to innovation and startups. Together with colleagues from Berlin, Dublin, Paris and Moscow, Sigrid joined a panel at 4YFN in Barcelona on building startup ecosystems. One of the key issues for the panel was the role of the public sector. There is no denial that this role is vital, especially for creating the right conditions and incentives in legislation or via instruments, including public procurement. Just look at the Baltic country of Estonia. A country which, after breaking away from communism, invested strongly in digital infrastructure and IT in a groundbreaking way. They created a foundation for the most forward looking ways for using e-government, e-health and boosting a startup culture at the same time. Public procurement was at the heart of this development. A digital patient dossier, e-citizenship, but also the startup Transferwise are examples of success stories.  Taavi Kotka, the CIO of Estonia, is one of our members of the Circle of Influencers, to share his ideas, experiences and network with us. It is the mindset that makes the difference: set the barrier high, not being hampered by vested interests and using all the brainpower to make things work! The Netherlands has the best Broadband network in Europe and because of this we attract investors and innovators. Also if we look at the opportunities of 5G and the Internet of Things. In the Nineties, Europe was leading on GPS and mobile by joining forces and investing. On a European level we should set this ambition again.

So, the public sector can play the role of the change agent. The proof is there. The public sector as an innovator. This role and opportunity however, cannot be emphasized enough. An example – a future possible Dutch best-practice- could be the new procurement legislation, which will be on the agenda in Parliament in March. This legislation should provide the right framework to create the incentives and space for innovation, for SME's and startups. In a letter, which will be send out next week, Neelie calls upon Parliament to have an extra critical look, because this will be a unique opportunity to turn Dutch public procurement from a risk averse system, into an innovation embracing and risk managing approach with space for experiment and change!

A legislative framework which allows experiment is crucial. Just as important as mobilizing the partners and networks to create these experiments and test beds for innovative solutions. Together with the Chairman of the Association of Netherlands Municipalities (VNG), Jan van Zanen, Neelie has written a letter to the Mayors of our five largest cities to join forces, expertise, best-practices when working on innovative public procurement. There are so many great examples of test bed environments, experiments, SBIR arrangements in which innovative public procurement already plays a role.

When we look at regional best-practices in the Netherlands, Amsterdam is a great example with their startup in residence program. Or Eindhoven who invite private contract partners to organize a cooperative network of innovators around projects like "smart lighting" or "smart sustainability". Also the national government has used SBIR to give incentives for SME's and Startups. This should be further increased, however. It has hardly come off the ground, unfortunately.

The letter also mentions to look at other best-practices in the world to speed up and professionalize. In New Zealand the government has erected a special reform and support program for government procurement. A kind of PIANOo (Dutch Public Procurement Expertise Centre), which we have in the Netherlands. In New Zealand it is backed by the Ministries of Industry, Finance and the Cabinet State sector Reform and works with international benchmarks and training programs.

The upcoming new Dutch legislation should provide the excellent framework for speeding up the public learning curve, triggering the best solutions from our best companies, startups and institutes and benchmark results.

Last, but not least. Another important area where the government can be a change agent for innovation, is by creating tax incentives for investors or making it possible for startups to pay their staff with options. At this moment, on the basis of Neelie's letter to Parliament the Dutch tax authorities are looking into the possibilities how this could work within the reserved budget of €50 mln and under which conditions. The outcome will be revealed in March. This month will prove how the government can play the role of change agent to speed up innovation, investments and scaling up for startups.

And, if you have missed, DWDD where Neelie announced the speakers for the StartupFest Europe, which will be held at the end of May.

Neelie Kroes, Special Envoy for Startups

Sigrid Johannisse, director StartupDelta