Accelerate Estonia - Observatory of Public Sector Innovation

We detect wicked problems and turn them into new spaces for innovation. It is a platform for all Estonian ministries, the public and the private sector, experts and entrepreneurs to join forces and build the future that we deserve. We are untapping new markets with a powerful but lean public-private collaboration.

Innovation Summary

Innovation Overview

The grand challenges modern societies face - aging population, environmental and climate issues, information wars, etc - have no silver bullet to solve them. But in Estonia we have found ourselves in a fortunate situation where the government can take on startup-like ventures to push the edge of what governments are capable of. We have already introduced to the world the concept of erasing digital borders between countries by introducing e-Residency (https://e-resident.gov.ee/). With Accelerate Estonia, we have pushed further to unveil complex problems that our society faces and undertake missions to solve them. We are a governmental manufactory for moonshots.

There is no lack of private sector enthusiasm in asking the government to innovate faster. Every month, if not more often, our political elite and top level civil service will meet aspiring entrepreneurs who will argue that they know how to create a prosperous future for the whole country. They may say that our next competitive edge may be in becoming a regional crypto-kingdom, or a paradise of ecological production, or that the real solutions to climate change will be bred here in Estonia. In reality, most of these efforts are clueless of what is actually needed. Fortunately, some of them may be on to something.

How might a government find out which missions to follow and which to ignore? There should be some way to make these choices. That is what Accelerate Estonia is founded for - building a filter that would help validate where government can help with radical innovation and where not. We cannot pick every mission, but we need to get smart about which fights are worth picking so we can prosper and find economically sustainable policies to tackle our major societal issues.

Here is how it works:
1. Through interviews and public events, we identify which individuals and ministries are open to rapid innovation. We only work with those that are currently willing to change.
2. With these ministries, we define the complex problems that need to be solved and which don't have a solution yet.
3. Then we create a call for innovators that offer possible out-of-the-box solutions to these complex issues.
4. In a competitive atmosphere, we figure out which of these innovators deserve a proper investment for validation and implementation.
5. For these few that are chosen, we offer a curated development of their idea with access to government, an R&D grant that matches the needs of a meaningful pilot, and the Accelerate Estonia brand to highlight the necessity and urgency of the experiment.
6. It is then up to the innovators and their public sector counterparts to prove they can push the edge of government where it has never reached before.
7. For those that make it, there will be follow-up investments available either from public or private sources, or as a combination of the two.

As objectives, we have focused on the size and variety of the portfolio thus far. Another objective is the cumulative effect of these experiments, therefore we started 6 different projects to help us become pioneers in the green turn. From 2022 onwards, we expect economic output as well as solutions to pressing issues. For example, some of our alumni have raised VC funding after exiting from our programme, but some have become public services, and some have failed.

It is natural for government innovation labs to be in testing mode for years before institutionalisation. That is our logic, too. We are making use of close partners that the government already has - an incubator, startups, ecosystem players. We refrain ourselves from institutionalising the approach until we know what works and what does not. But scaling is in the vision - the projects we choose must first have impact in Estonia and thereafter regionally or globally.

Accelerate Estonia has been built on a lot of previous accomplishments. The edge of government is already quite far along in Estonia, but we are pushing it further. In addition to eResidency - a governmental platform that has enabled more the creation of more than 10 000 companies and creates more than 30 million euros in tax returns every year - Estonia already has the best tax code in the OECD. We have almost all of our public services digitally available. Our startup sector is growing 30% every year. In short, there is a strong virtuous cycle here that can be accelerated further to help solve grand challenges.

Innovation Description

What Makes Your Project Innovative?

Democratic governments often find themselves in a paradox — we are supposed to tackle complex issues that the private sector can’t solve, but we are usually only equipped to solve issues within our siloes. Accelerate Estonia is lending a solution from the corporate world - bringing in entrepreneurs-in-residence to understand and solve for complex issues. But we are only offering the solution in situations where know that the organisations are capable of innovation.

In such a way, we bypass the lack of innovation capacity by enabling innovation-friendly government organisations with partners that are willing to shake the status quo. And we offer these stakeholders - government organisations and their entrepreneurs-in-residence - with a well curated acceleration programme that will take them from problem exploration to a validated investment decision.

What is the current status of your innovation?

The Accelerate Estonia process is the following:
1. Identify complex problems - DONE. We talk to all of the Estonian ministries annually and ad hoc to find partners with acute need for experiments.
2. Generate ideas and solutions - DONE. We describe problems and solution once or twice a year and organise calls accordingly.
3. Validate and generate proposals that will tackle the issue - DONE. We have a portfolio of roughly 25 experiments that we have supported.
4. Figure out how to implement the solutions in the public sector - IN PROGRESS. Generally the public sector impact is process innovation, which is either in progress or pending a political decision.
5. Evaluating the results - IN PROGRESS. With an agile approach, evaluation is always in progress.
6. Diffusing lessons - IN PROGRESS. We have already improved our model 2-3 times.

Innovation Development

Collaborations & Partnerships

Companies and civil society organisations - for each policy area we worked with, the private sector community is brought in to assess the complex problems and offer solutions.
Government officials - we meet with key ministerial and agency stakeholders and give all of them a chance to propose complex issues worth solving in a novel way.
Citizens - the opportunity to offer solutions has also been opened to citizens.
International community - our portfolio originates from different countries.

Users, Stakeholders & Beneficiaries

Civil servants - the innovation-minded people who have complex issues on their table that they are unable to turn into new market opportunities due to a siloed structure.

Entrepreneurs-in-residence - the innovators who are passionate in their profession, willing to give back to the society and willing to design out-of-the-box solutions or moonshots together with Accelerate Estonia.

Industries - each innovation we pick will serve whole industries.

Innovation Reflections

Results, Outcomes & Impacts

Year 1: prove the initial model with up to 5 projects. Out of 17 validated ideas, 4 were chosen.
Year 2: double the size of the portfolio and iterate the model. Out of 8 validated ideas, 2 were chosen. A competitive angle was added to the model.
Year 3: secure funding for 3 more years. Increase the portfolio. Define route to economic impact. Funding has been secured and increased until 2025. Portfolio size has reached about 25 in total. Route to economic impact has been defined and ingrained into renewed strategy.

In addition to that, ca 20% of the portfolio has raised VC funding or is en route to do so. Another ca 20% have created special purpose vehicles to build on the achievements of the experiments. Ca 20% have failed due to different reasons (team, timing, policy concerns). For some part of the portfolio, it is too early to indicate results.

In the future we expect our track record to enable us to become more demand-driven and reach even further economic impact.

Challenges and Failures

The first challenge was political - two months into the programme, a new government came into power which was very sceptical of technology. That meant that the willingness of the private sector to cooperate was also lower. By now the waters have cleared.

Secondly, the quality of ideas we got was very variable and some high-level policymakers were demotivated by having mediocre innovation partners. We have redesigned our approach to choosing our partners and the process has been redesigned so that risks are more hedged. This needs continuous attention.

Thirdly, the issues we are tackling are not as complex or wicked as they could be. We could be even more on the edge. So for the next version, we will help the policy owners much more with designing missions that will make a big difference, and help them further with capacity building if needed.

Conditions for Success

The most important condition is the readiness of a few high level policymakers and their teams to absorb radical innovation. If there were no mission-driven policymaker, then we could not empower the innovators.

The second important condition is support from the "home ministry" - there is openness to radical innovation from the Ministry of Economic Affairs and Communications both on the practical and political level.

We were granted a budget that will enable to test with enough ideas and recruit a very professional team to run the acceleration itself.

It is also crucial that the motivation of myself has been built over several years of working closely with the technology ecosystem and a drive to bring on real change to the Estonian public sector. Over the last few years, the network necessary for this innovation was built, and now is the time to turn this asset into something valuable.

Replication

We are running an unusual version on the edge of the "govtech" world, and we have some key differentiators from other local ecosystem players as well as in the region. Having researched and visited similar organisations, there are not many efforts to design meaningful missions (= readiness to change the laws if need be, stand for the innovators as much as possible, create new industries).

I believe the innovation does not to be replicated within Estonia, but under the right conditions, many of its key processes can be fruitfully replicated in other countries. Fortunately, as innovation policy research shows, it is possible to pinpoint which innovation systems would be more likely to create value from adopting the Accelerate Estonia approach.

Lessons Learned

Firstly, such a project needs a small but cross-functional team. For us, 7 people is quite optimal to cover the key functionalities, usually the rest can be outsourced. In a lean government, that opportunity is essential for attracting valuable talent.

Secondly, there needs to be a few high-level policymakers to support it. We enjoy the endorsement of (previous) presidents as well as a number of ministers.

Thirdly, the approach needs to be agile, so that the details of the programme can be tested and changed rapidly without losing focus.

Fourth, we need to understand that this is pioneering work and almost no one in our public sector has done something similar. This can be very frightening, but also very motivating.

Last but not least - we need to be humble. If the government has invested into taking risks, then we need to serve the government well and without asking for public recognition or similar. It will come in due time, but first we need to deliver on your vision.

Anything Else?

Should you have an idea in mind, that could be tested out on a country scale, please get in touch via [email protected].

Should you want to share this with your network of entrepreneurs thinking out of the box, please share this onepager: https://accelerateestonia.ee/wp-content/uploads/2022/09/Accelerate-Estonia-Onepager-General.pdf