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Canada’s Smart Cities Challenge

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The Smart Cities Challenge is a competition open to local governments across Canada. Launched in 2017 as the federal government’s first prize-based funding program, it invites communities to solve problems and improve quality of life for residents by leveraging connected technologies and data. The Challenge incentivizes communities to approach problem-solving in creative ways by working with residents, building partnerships, experimenting and taking risks.

Innovation Summary

Innovation Overview

The Smart Cities Challenge was launched in 2017 as the Canadian federal government’s first major prize-based program and the first to use an outcomes-based ‘pay for success’ funding model. The initiative grew out of a recognition that conventional public sector programs are not often suited to foster creativity, and was inspired by similar international efforts that are encouraging experimentation in key emerging domains like smart cities.

In Canada, the need to incentivize innovation in the smart cities space is particularly salient. Despite the wide range of uses and the high potential to improve the efficiency of community systems, services, and infrastructure, the implementation of smart technologies by many Canadian communities remains in the early stages. Much of the problem can be traced to the constrained resources of municipal governments and an attendant culture of risk aversion that inhibits the deployment of projects. The potential excitement generated by a competition and the large size of the prizes relative to municipal budgets (CAD$50M, $10M and $5M) is a way to quickly grow awareness across the country, jumpstart adoption at the community level and transform Canada into a world player in the smart cities domain.

What does our Challenge look like? Up to three competition rounds will be launched, with up to CAD$240 million in prize money available to be won in multiple, population-gated prize categories. Eligible applicants are municipalities, regional governments and Indigenous communities. Governments are required to start from the ground up by talking to their residents. In a unique twist, project areas are not prescribed and can be in any area in which a persistent problem exists and over which the local government can exercise direct influence – for example, in transit and mobility, sustainability and greenhouse gas reduction in municipal services, population health and well-being, culture and language, safety and security, and economic development. This open scope is deliberate. It allows communities to develop, through open and transparent engagement, locally-tailored proposals that genuinely reflect what matters most to residents. Projects must be ambitious and transformative for the community, and must be shown to be replicable and transferrable to other communities so that all may learn and share in the benefits. And of course, the creative solutions proposed by applicants must clearly leverage data and connected technologies.

Since the smart cities terrain is generally a new area for local governments, participation in the program is characterized as a journey: applicant communities travel through phases of the challenge, beginning with an application preparation and submission process that mandates engagement with community residents and the development of outcomes-focused and measurable ‘Challenge Statements’. After submission, adjudication of applications is performed by an independent jury. Applicants chosen to advance to the finalist phase are awarded with capacity-building grants and continue their journeys with the preparation of final proposals. These proposals are evaluated by the jury, which recommends winners in each prize category on which projects best exemplify the deployment of smart city approaches for the benefit of residents where lasting outcomes are tangible and transformative.

The first round of the Challenge saw a tremendous positive response. A total of 225 communities applied, representing all regions of the country and a wide range of community types and sizes. In June 2018, the Minister named the twenty finalists of the first round of the Challenge, and in May 2019, the four winners were announced: Montreal, Quebec ($50M), Guelph and Wellington County, Ontario ($10M), the communities of Nunavut Territory ($10M) and Bridgewater, Nova Scotia ($5M). The Challenge is also the first to deploy collaborative ‘outcomes-based’ funding agreements, in which the payment of prize money is tied to the ability of winning communities to demonstrate the achievement of outcomes. These communities are currently negotiating the terms of these outcomes-based contribution agreements and will begin project implementation in 2020.

The Smart Cities Challenge seeks positive impacts on two key fronts: 1. Demonstration of success with respect to prize- and outcome-based challenges and their impact on driving results and informing policy approaches, and 2. Participant- and stakeholder-centred goals of success and performance to increase innovation capacity, create and sustain multi-stakeholder partnership and networks, measure positive outcomes (e.g. economic, social, environmental) for participating communities, and facilitate sharing of solutions to other communities.
The next round of the Challenge is anticipated to be launched in mid-2020.

Innovation Description

What Makes Your Project Innovative?

The Smart Cities Challenge is using a competitive, prize-base funding model as well as nudging a resident-centred approach to smart city technology adoption. In a fast-moving and often confusing space the process for local governments to develop or procure smart city technologies is full of potential hazards. To mitigate against the potential for closed, “technology for technology’s sake” initiatives in which solutions go in search of a problem, the Challenge is using a suite of innovative design elements, including:
• An open scope and requirement for resident engagement at all stages of project elaboration to ensure that the project is rooted in local needs
• A requirement for partnerships that span multiple sectors to ensure project sustainability
• A requirement for openness and transparency so that all may benefit
• Capacity-building funds so that proposal development is well-supported
• A parallel program to build broad community capacity in the smart city space in Canada

What is the current status of your innovation?

As an experimental program, the Smart Cities Challenge has the flexibility to change its design in order to test the effectiveness of program elements, improve service delivery and achieve results. In order to ensure a comprehensive analysis, deliberate steps have been taken since program inception to collect and track observations, findings, and lessons learned on all aspects of program design and implementation. Using a wide variety of qualitative and quantitative data sources and drawing upon the feedback and insight of participants and stakeholders, the team is currently formulating recommendations for the design of the next competition, which is anticipated for launch in mid-2020.

Innovation Development

Collaborations & Partnerships

The program relies on ongoing cooperation and buy-in from federal departments and central agencies. It also relies on the academic, non-profit and philanthropic sectors who are regularly invited to provide insight and advice on the program’s design and implementation, and who play an ongoing role in its continuous improvement. Communities participating in the Challenge continue to provide feedback on their successes and challenges which are used to optimize program design and implementation.

Users, Stakeholders & Beneficiaries

Program success is due to strong collaboration with partners from multiple sectors. Communities large and small - both governments and residents - are the core users of the program, and the requirement for communities to build multi-sectoral partnerships ensures ongoing buy-in and benefit to stakeholders from all sectors: academia, non-profit, public, private, and philanthropic. Actors from these areas are also implicated in ongoing consideration of the design and implementation of the program.

Innovation Reflections

Results, Outcomes & Impacts

As an experimental program, findings and lessons learned are gathered on an ongoing basis on all aspects of design and implementation, yielding a rich collection of data. Results so far suggest progress toward success on several fronts, including advancing outcome-oriented public programming, spurring community innovation in the smart cities space, ensuring meaningful resident engagement at all stages, and encouraging multi-sector partnerships.

The first competition saw project proposals covering nearly 20 thematic areas. A majority (55%) of participants reported that the Challenge helped to uncover previously unknown community problems, 52% said that it introduced new players into community planning processes, and 64% reported that their journeys uncovered previously unrecognized barriers to innovation. Among Challenge finalists, 80% established partnerships with multiple sectors (private, non-profit, public, academic and community organizations).

Challenges and Failures

With communities of all sizes and means participating in the challenge, ranging from Canada’s largest cities to rural, remote and isolated communities with small budgets and limited resources, there is evidence to suggest an unevenness in community capacity in several areas, including ability to build sustainable partnerships across multiple sectors and to develop proposals that are ready to hit the ground running.

We have also learned that communities may need more time to develop their proposals, and require more targeted capacity-building guidance and support, particularly in navigation of complex areas like data governance, management, privacy and cybersecurity, and in the development of logic models and measurable performance outcomes.

Conditions for Success

1. As an experimental program with a small team trying new things in the context of a traditional government department, the program relies heavily on support from departmental partners and senior management.

2. Flexibility built into the program’s unique terms and conditions, including a mandate to track lessons learned and adapt over time, allows the program to actively build on its successes and avoid pitfalls.

3. The active engagement of program stakeholders, including participants and partners in the academic, non-profit, private and philanthropic sectors, allows the program to stay up-to-date on the latest information and experiences in the fast-paced smart cities domain.

4. Openness and transparency built directly into the program’s design allow for a sense of shared ownership of the program both in terms of the experiences and plans of program participants and of its overall lessons learned.


The Smart Cities Challenge is not unique in using prizes to encourage innovation. What is unique is its active avoidance of “technology for technology’s sake”, achieved using design elements (e.g. open scope, weighted criteria, transparency) deliberately chosen to incite governments to build projects from the ground up and ensure that community needs and not those of tech vendors are at the centre of project development. Also unique is the requirement for proposals to be outcomes-focused – starting with the end in mind – with transformative goals driving all areas of the project.

As questions of resident buy-in are particularly compelling in the smart city domain, these design choices have garnered considerable international interest, with other jurisdictions closely watching the longer-term impacts of this approach. It is hoped that these design choices will serve as positive examples of smart city project implementation and be replicated in similar efforts elsewhere.

Lessons Learned

We have learned that:
1. Communities need more time and more resources to develop proposals, and many require more targeted capacity-building guidance and support, particularly in their navigation of complex areas like data governance, management, privacy and cybersecurity, development of logic models and identification of measurable performance outcomes. Actively boosting the knowledge and capacity of communities to create sustainable, implementation-ready projects will help to ensure that both winning and non-winning projects work, and that they will last.
2. Placing emphasis on resident engagement, an open, uncircumscribed scope, and insisting on openness and transparency are all valuable design principles. With these in place, the Smart Cities Challenge has been able to successfully spur communities to meaningfully engage their residents in the ideation and design processes and has motivated them to develop innovative and strong proposals. Remaining open and transparent while actively leveraging the will of residents seems to create a spark that springs communities into action.
3. Despite being a competition, the Smart Cities Challenge has shown that communities in Canada are eager to share and learn from one another, particularly with an eye to apply replicable smart city solutions to their own communities. With this insight, we have been able to see the broader benefits of a relatively modest and scalable funding program, which has created an opportunity to drive innovation across Canada and beyond.

Supporting Videos


  • Implementation - making the innovation happen
  • Evaluation - understanding whether the innovative initiative has delivered what was needed
  • Diffusing Lessons - using what was learnt to inform other projects and understanding how the innovation can be applied in other ways

Innovation provided by:


Date Published:

3 November 2021

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