The Digital Hub: Accelerating Digital Municipalities (Hub digital: Acelerando Municipios Digitales) seeks to accelerate digital transformation in the Chilean municipal sector through the connection with startups. Using corporate venturing as a linkage mechanism benefiting the municipalities and communities themselves, for a solution will improve the quality of services provided to neighbors. Although corporate venturing is widely used in the private sector, we seek to validate its results in the municipal sector during this experience.
In Chile in 2019 the law of Digital Transformation in the State was published, which promotes the digitisation of all processes within the State. At the level of the central state, the drive is aimed at improving a specific service associated with each ministry, but on the other hand, municipalities provide a range of services to the community and therefore have the greatest opportunity to improve their services by moving towards digital transformation (DT).
Driving TD requires investment in both technology and human capital, since it is people who ultimately use and improve processes available within an organization, but given the scarcity of resources available in the municipalities, corporate venturing is a quick way to accelerate TD. This is a mechanism widely used by companies in Latin America, by 2020 the region had 460 of these initiatives (IESE 2020), but it is not yet a mechanism used by the municipal sector, so through this initiative we seek to innovate in the mechanisms to promote digital transformation. Thus the objective of the Digital Hub, from now on Municipia, is to promote digital transformation in 20 municipalities in Chile, diagnosing, suggesting and accompanying the implementation of technological solutions, seeking that all municipalities have at least one implemented pilot.
These technological solutions will come from startups, particularly Govtech, which will be convened from the main challenges diagnosed in the municipalities. The municipalities will benefit from this innovation, both in terms of knowledge about the innovation ecosystem and learning obtained through the implementation of this project. In addition, the implementation of any technological project will have a direct impact on the municipality's officials and neighbors, since the digitisation of processes can improve their effectiveness and increase the satisfaction of the neighbours. This, on the other hand, improves the national innovation ecosystem by involving the municipalities in this space, developing "new markets" for Govtech.
What Makes Your Project Innovative?
Municipalities are generally used as startup accelerators, but in our proposal we are looking for them to connect with startups in the process of scaling up and therefore holding a robust solution. It is innovative in that it seeks to get municipalities to use companies in the process of growth as suppliers, and which have a different dynamic to the large technology providers they work with, which in many cases provide a poor service for the sector. It is innovative in that it seeks to position municipalities within the national and global innovation ecosystem, positioning municipal management as modern management for municipalities and that in the short term can generate positive impacts for civil servants and the various communities they must manage and serve.
What is the current status of your innovation?
This year we plan to work with 20 municipalities, but we seek to promote this initiative in order to reach more than 300 municipalities nationwide, seeking to function as a massive service that takes advantage of economies of scale and that is a flagship initiative of the Association of Municipalities in Chile (AMUCH).
Collaborations & Partnerships
Municipal civil servants were key to facing challenges, and without this context any proposed solution would not respond to a real problem within the municipality. The startups that were interested in contributing their solutions to the municipal sector, which allowed us to provide new options for technology providers to a sector that usually only works with large companies.
Users, Stakeholders & Beneficiaries
Decision-makers within the municipalities benefited from a diagnosis of their main challenges, from which they defined which technological solutions they would be interested in collaborating with. The process is in the process of validating the solutions together with the municipalities, so it is expected that when collaboration agreements between the municipalities and the startups begin to be affirmed, civil servants and neighbours will be impacted.
Results, Outcomes & Impacts
So far the main impact is associated with outreach, where more than 50 civil servants have participated in the survey process, more than 800 people participated in the presentation of solutions and more than 10 working sessions have been held between municipalities and startups to define the parameters of the collaboration. The expected future results are to evaluate the number of agreed pilots, the results of each pilot and the satisfaction of the municipality with the provider. We expect that the solutions will mainly improve the speed of execution of the various processes within the municipality.
Challenges and Failures
One of the main challenges is to establish an effective communication channel with the municipalities, since the fact that this is an unprecedented programme means that a first barrier is that of indifference. Another challenge lies in the leadership within the institution, since in many cases the person who assumes the role of coordinator of the initiative does not feel capable of convening his or her colleagues to the survey sessions. At the moment, one of the biggest failures is that those municipalities that confirm their participation stop responding, thus delaying the overall progress of the project, and the mechanism we have found is direct communication with the mayors of the participating municipalities, who allow us to prioritise the progress of the project.
Conditions for Success
The success of a corporate venturing process in a municipality depends on the commitment of the leaders of the institution, the mayor and the municipal administrator, without which it would not be possible to move forward. Similarly, a key variable is the availability of financial resources to enable them to hire the startup that meets their needs, for which a key policy that could be facilitated is the agile purchase of startups from the state, which lowers the administrative barriers for this process.
In Chile, two corporate venturing efforts have been carried out: 1. Lab City, an initiative promoted by the municipality of Puerto Montt, where potential entrepreneurs are sought for an incubation process for their ideas. 2. Glocal Pucón, is a programme that seeks solutions in sustainable issues and awards prizes to them. Both are similar to Hub AMUCH, which shows that there is interest in the association of the municipal sector with startups, so it has a high potential for replicability throughout the country, and even in the region.
In order to work with local governments, in this case municipalities, it is key to convince the teams throughout the process, given that any pilot that is designed will be met with detractors, and the only way to reduce their impact is to have people in favour of it. In the same vein, the role of the technology areas is very focused on operational maintenance but with little room for the design of new solutions or the search for alternatives to improve the municipality. That said, we have started to suggest to all municipalities that they redesign the role of these areas, so that they can not only fulfil a technical role, but also promote transversal projects for the institution.
It is important to highlight the high level of public-private collaboration in the initiative, which seeks to promote the local economy through the public system itself.
- Implementation - making the innovation happen
4 August 2023