Forum Virium: Brokering smarter cities

Forum Virium: Brokering smarter cities Forum Virium, a subsidiary of the City of Helsinki, is an innovator and broker of cooperation among companies, public sector organizations, and citizens. It has used open innovation techniques to develop practical collaboration projects involving end users very early in the process. This approach has delivered better services for citizens, helping to avoid failure by testing these new approaches in real-life environments while generating business growth and new market opportunities for companies. By Vesa Salminen Introduction In early 2006, Forum Virium Helsinki (FVH) was established in Finland to boost innovation creation and digital business development through public private collaboration. The original initiative came from a group of ten information and communication technology companies, who saw they would benefit from a common cooperation and development platform with one of their key customers, the City of Helsinki. They sold the concept to the City of Helsinki, where it was seen as a novel approach to developing more user-driven (and cost-effective) services for its citizens. Previously, no such platform had been available in the region. Since its establishment, FVH s thematic focus has shifted from general service development toward open data and their use in urban environments. Now, in 2014, FVH can be described as a smart city innovation unit within the City of Helsinki group (project examples are provided in boxes below). The term smart city refers here to the development of services through digital solutions and the utilization of open public data. The aim and added value of FVH are twofold. For the city and its citizens, FVH aims to create cost-effective services based on the real needs of users. For the companies, it aims to generate business growth by creating new networks, providing testbeds for products, innovating ideas, and initiating international market opportunities. Another important value to companies is the

valuable information and contacts they gain from a potential key client organization (the city). As Helsinki, like other cities, faces the challenges of a shrinking budget, the need to find cost reductions and new sources for growth is strong. The key concepts behind FVH are open innovation and a user-driven approach. 1 By planning and implementing concrete development projects together, the companies and public actors can share and discuss ideas, needs, and future prospects in an open process. The goal is to harness the innovative capabilities of the entire urban community by promoting cooperation among different actors. End users (citizens) are engaged as early as possible in the projects and the development of services through various methods. Openness is seen not as an ideological but as a pragmatic approach a way to develop more user-driven and/or costefficient services and to avoid failures by testing and piloting them in a real-life environment. Digital solutions and interfaces ensure the engagement of large numbers of citizens with projects and in developing services. FVH s approach contributes to national-level priorities in Finland concerning demand and userdriven innovation, 2 the application of information about communications technologies, 3 and smart city projects. 4 Design Governance Forum Virium Helsinki Ltd. is a subsidiary (limited company) owned by the City of Helsinki and an official part of the Helsinki City Group. FVH s official partners are its five anchor companies that is, its founding members, consisting of mobile communications company Nokia, telecommunications companies Elisa and TeliaSonera, information technology (IT) services company Tieto, and the Finnish Broadcasting Company (YLE) along with five other partner companies and six public sector partners (for example, the Ministry of Transport and Communications; Tekes, the Finnish Funding Agency for Innovation; and the VTT Technical Research Centre of Finland). FVH is led by a board of directors whose four members come from FVH, Aalto University, and the City of Helsinki. Other key decision-making bodies are a steering group and a working committee comprising representatives from FVH s partner companies and public sector organizations. 1 For academic discussion, see, for example, H. W. Chesbourg, Open Innovation: The New Imperative for Creating and Profiting from Technology (Boston: Harvard Business School Press, 2003) and E. Von Hippel, Lead Users: A Source of Novel Product Concepts, Management Science 32 (1986): 791 805. 2 Ministry of Employment and the Economy (MEE), Demand and User-Driven Innovation, http://www.tem.fi/en/innovations/demand_and_user-driven_innovation. 3 MEE, 21 Paths to a Frictionless Finland, ICT2015 working group report, publications of the Ministry of Employment and the Economy, 2013. 4 Tekes Witty City Programme, http://www.tekes.fi/en/programmes-and-services/tekes-programmes/witty-city.

The steering group had fourteen members as of December 2013 and was chaired by the City of Helsinki. Its role is to take part in developing FVH s strategy, action plan, and budget, along with accepting new members and deciding on the initiation or terminating of projects. The steering group also handles the building of relations with various interest groups and approves FVH s communications principles. The nine working committee representatives are named by the steering group and are responsible for the operational direction of projects and programs. Some project areas have specific development groups, and a separate group, consisting of communications specialists from member companies and partners, focuses on FVH s communications. As a subsidiary of the City of Helsinki, FVH operates according to the city s legal and administrative processes. Roles and responsibilities of the actors are defined in a cooperation agreement. FVH is open to all organizations interested in developing digital services. New members join the cooperation agreement through an accession agreement. Funding FVH s initial budget in 2005 was approximately 1.3 million. By 2013, the funding had more than doubled to some 3 million. The main sources of funding are the Innovation Fund (City of Helsinki), membership fees, assignments from the cities, and project funding (for example, from Tekes and the European Union framework program). The amount and share of the project funding have grown significantly in recent years, which also explains the overall budget growth. Funding sources are presented in more detail in table 1. Table 1. Forum Virium funding in 2013 Funding source Euros (2013) Percentage City of Helsinki Innovation Fund 950,000 30 Companies membership fees 80,000 3 Assignments (turnover) 650,000 21 Project funding (Tekes, European Union) 1,530,000 46 Source: Forum Virium 2013 The discontinuities in funding are the most crucial challenges to FVH, as they can result in its not being able to focus efforts on the most viable operations for example, on the scaling of the results of individual initiatives. Ensuring a steady flow of funds is thus vital for FVH, and the yearly basic funding it has received from the city has been vital. Staffing, experts, and networks FVH s personnel numbered thirty-one at the end of 2013 (compared with seventeen in 2010). Only nine were permanent employees, while others were project staff employed for fixed terms.

The expertise of the staff was very heterogeneous, including experts in design, economics, coding, professional project managing, and even anthropology. Besides its own experts, FVH uses a lot of external experts and subcontractors, especially for specific substance areas (for example, elder care) in individual projects. Flexibility in staffing and use of the best available expertise are highly important. One good practice related to staffing and using experts has been fixed-term expert swapping between FVH and its partner organizations, which has meant either recruiting experts from the public sector or sending FVH s experts to partner organizations. Besides FVH s official partners, various other partners, such as researchers, media partners, local communities, and nongovernmental organizations (NGOs), collaborate on individual projects. These partners are identified case by case for each project. International networks (especially the European Network of Living Labs) are also essential to FVH because of their value in identifying the most interesting international projects, expertise, and ideas. Foreign collaboration is implemented through joint projects, events, and information sharing. Themes and program areas Forum Virium s operations mainly take the form of concrete development projects, carried out within the following five program areas: Smart City (developing digital urban services that make traveling and living in the city easier) Innovative Public Procurement (finding better ways to utilize the innovation potential of private and third-sector actors and end users in public procurement) New Forms of Media (looking for ways to produce new kinds of social media services on the users terms and in a user-driven way) Well-being (developing new digital services to promote the general well-being of citizens) Innovation Communities (testing and developing user-driven innovation processes, methods, and tools) The themes and related projects identified and selected by FVH and its partners have evolved over the years. Initially, they were more substance oriented and focused on individual municipal branches or sectors (for example, social and health care or transport). Now the themes are more cross-cutting, and a cross-sectoral approach to finding innovative solutions is actively promoted. Currently, FVH s main focus is on topics related to open data utilization and smart city issues (see the example projects described in the boxes below).

Box 1. Helsinki Region Infoshare (HRI) The Helsinki Region Infoshare (HRI) project provides a good example of FVH s role as a smart city broker. The project focused on opening public data of Helsinki region municipalities to all interested parties. The data comprise numerical and statistical information produced by the municipalities, previously available only to their staffs. The project s aim was to support software developers in developing new digital solutions and applications as well as research and development activities. HRI received the European Prize for Innovation from the European Commission in 2013.The data (more than 1,000 open data sets) are available free of charge on an online service, launched in 2013 and currently administered by the municipalities: http://www.hri.fi/en/. FVH was responsible for project planning and starting and coordinating related subprojects.

Box 2: Open and Agile Cities (Avoimet ja ketterät kaupungit). Open and Agile Cities is a strategic city development program launched in 2014 for the six biggest Finnish cities. The purpose is to strengthen Finnish competitiveness by using the city regions as testbeds for innovations and thereby improve the sense of community, openness, and accessibility of the cities and society in general by producing better services for citizens and initiating business openings for companies. An important element of the program is the opening up of public data (for example, on transportation or service networks) by the participating cities. This enables software developers to develop new digital solutions (for example, mobile applications for giving feedback and reporting improvement suggestions for the city), which in turn helps to create better services and reduce costs. The applications are designed on a common digital interface, harmonizing the different interfaces of the participating cities. The results and interface are available for all Finnish municipalities. The budget for the whole program is 70 million for seven years. The program consists of various small and concrete pilot projects in different cities. The best practices are disseminated to other cities. Figure 1. Illustration of smart participation interface Source: Forum Virium

Implementation The basic guiding principle in the practical implementation of the projects is the engagement of the end users. They are involved in testing the services in everyday life (for example, as observed clients in health care or users of mobile applications), as well as taking part in the innovation planning phase (for example, through surveys or as participants in planning workshops). Living Lab methods 5 are often used, with FVH coordinating the Living Lab operations in the Helsinki metropolitan area. 6 According to the FVH website, Living Lab is a real-life developing environment in which new services, products, business models and technologies are being developed together with companies, the public sector, research institutions and citizens. Living Labs implement user-centric method into practice. End-users give feedback on their experience, which is used to further improve existing services or products, or to come up with entirely new concepts. 7 The identification of end users is, in many cases, performed manually with the help of public sector partners. Their role is important, as FVH does not have their access to customer information. The use of media is also important, and a media partner (such as a local newspaper) is involved in many projects. FVH has set up an implementation process of seven phases for its development projects that embodies its approach and working methods from the idea phase to the end of the project: 1. Foundations for planning. This includes mapping and identifying needs, users, and key stakeholders, as well as evaluating previous projects. 2. Understanding user needs. The key objective here is the participation and engagement of end users by, for instance, observing service situations, interviewing the users, or performing analyses of target groups. 3. Analyzing service needs. This phase includes the mapping of related projects and services and the technical competitiveness and efficiency of the planned services through, for example, SWOT (strengths, weaknesses, opportunities, and threats) analysis. 4. Conceptualization of services. The key objective here is to analyze and describe the user path of the planned service that is, the role and actions of the users during the development project. In addition, the final implementation plan (selecting the partners, defining roles and responsibilities, setting the budget, and determining resources) is drafted in this phase. 5 See also Chesbourg, Open Innovation. 6 www.helsinkilivinglab.fi. 7 http://www.forumvirium.fi/en/introduction/how-we-work/living-labs.

5. Testing and piloting the services. The aim is to get direct feedback from the users about the functionality (content and technical) of the service. This can help speed up the introduction of the services, promote the commercialization of innovations, and trigger demand for new solutions. Practical methods include, for example, focus group interviews. 6. Evaluation of results. 7. Communicating the results. The results of the project are reported through, for example, social media, newsletters, workshops, road shows, and the partners own communication channels. The role of FVH in the process depends on the setup of the project team and can range from taking an advisory position to assuming overall responsibility for the execution of the project. One of the most important functions of FVH though only a small part of what it does is to produce and productize new ideas for projects as well as possible so they can be evaluated and discussed a role supported by its position as a matchmaker between companies business interests and public actors needs. Productizing includes drafting an initial budget and work plan for the project. Approximately every tenth idea may lead to a pilot project, and every tenth pilot project may lead to a fully functional service. Another crucial role is to sell the ideas and build commitment to it and ownership among the participants. FVH emphasizes open and active dissemination of project results, best practices, and lessons. In addition to knowledge sharing, this may include scaling up the results of projects, replicating pilots or activities within Helsinki or in other cities, and/or increasing the number of participants in a project or, for example, increasing the geographical coverage of the initiative. As part of its network services, FVH also organizes different events to develop networks, business openings, and new business-to-business relationships. They include annual seminars, open forums (two-hour morning meetings on topical issues), cooperation seminars, the Ice Breaker Concept (a dinner reception facilitated jointly by FVH and the City of Helsinki), and company visits introducing international experts to member companies. Results Four products of FVH can be defined: New (productized) project ideas Project implementation Commitment building and the raising of project funding Network facilitation To date, neither FVH s effectiveness nor its results have been evaluated. Increases in its personnel and the share of project funding in FVH s budget, however, as well as continuation of

partners commitment and successful implementation of development projects indicate FVH has delivered results and added value to its stakeholders. As for more long-term effects, FVH has pioneered the open data movement in Finland and contributed to the opening of public data, which may help generate new business for software developers and create more user-driven and cost-efficient services. The Helsinki Region Infoshare project (see Box 1) is a good example. According to FVH, other key results include the following: Bringing new tools for the city and other partners with which to manage technological change Changing the way citizens interact with the city by promoting new applications and new services Changing the way city cooperates with software developers Contributing to building Helsinki s smart city image based on disseminating new knowledge to the Finnish innovation ecosystem Strengthening Helsinki s international networks and utilization of, for example, international funding Figure 2 presents an outline of Forum Virium s logical framework. Figure 2. An outline of Forum Virium s logical framework Source: Author.

According to FVH s experiences, the appropriate criterion by which to evaluate the results should be the concrete immediate results of the projects, such as the number of users or visitors, the number of active and passive users, the amount of content, the reductions in costs, or the startups or new business lines established around the services created. Besides such quantitative indicators, qualitative feedback from the users and partners is important, as is assessing whether the projects create new procedures and the possibilities for applying them elsewhere. Identifying long-term impacts (for instance, the improved well-being of citizens) is more difficult, as the nature of services and impacts is very complex and visible only after several years. They are especially difficult to discern in health care and in the social sector, where unequivocal explanations are not accepted and gaining credible evidence for whatever effects may occur, is extremely difficult. Feedback from end users, however (for example, responses to a user satisfaction survey), can be used as an indicator. Lessons learned Key takeaways Forum Virium Helsinki is an interesting example of a broker model for innovating ideas and initiating cooperation among companies, public sector organizations, and citizens. Through the implementation of practical collaboration projects the model can help improve the user friendliness and cost efficiency of public services as well as initiate business opportunities for partner companies. The democratic aspect of open innovation also serves to improve the legitimacy of the model and build trust among different actors. The transformation of FVH itself from a general innovation development platform into a smart city innovation unit of Helsinki highlights FVH s key principles of agile and user-driven development and openness for renewal. The ability to adjust to a changing environment and changing customer needs is one of the key lessons for establishing this kind of broker model. On a practical level, FVH s experiences provide lessons for (1) brokering public private collaboration and (2) developing urban environments through practical development projects. Practical lessons Practical lessons on initiating and managing public private collaboration include the following: Build commitment among the partners. Projects without true commitment have little chance of succeeding. FVH has achieved the best results in projects that have had strong commitment from all the key participants. Especially important has been the strong commitment of the City of Helsinki, as it has enabled continuity by providing a backbone and basic funding. Being an official part of the city strategy is also highly important. Without true commitment, the danger is that some partners will participate in the project only because publicity and big investments by their organizations make them

feel obliged to do so. Projects without full commitment and true ownership have very little possibility to succeed. Recognize and respect the different (selfish) interests of all partners and identify the added value that cannot be obtained elsewhere, and communicate it continuously to all partners. Successful concrete pilots and visible results (that is, improved efficiency of services through digital solutions) are crucial for public sector partners, whereas companies value information, networks, and contacts with public sector research and development activities. The ability to provide and communicate the added value is especially important at times when partner organizations may need to reduce their costs. Aim for concrete results and visible work in building legitimacy and commitment. Instead of launching extensive programs with big expectations straightaway, start with efforts from which results can be achieved quickly. Find a common language. FVH s position among the partners helps it act as a broker among the communities and find a common language between companies and the public sector. Expert swapping between FVH and its partners further supports this role. Pay attention to individual-level contacts and collaboration. Despite organizationlevel agreements, getting individuals excited and committed is the starting point of each project. One of the biggest risks related to partner networks is that a contact person may leave or change position within the organization in the middle of an intensive collaboration. Sometimes the contact person may also be phlegmatic or act as a plug in the partner organization. Practical lessons on developing urban environments through concrete development projects include the following: Approach open innovation as a pragmatic way to get better results and avoid failures. The democratic aspect of open innovation also serves to improve the legitimacy of the model and build trust among different actors. Promote the utilization of open public data. The opening of public data helps generate new business for software developers and create more user-driven and costefficient services. Avoid technology-led, top-down models. Rather than being simplified as mechanistic machines, cities should be considered as very complex communities. The services designed should be people oriented, avoiding technology-led, top-down models. This requires adopting an open and customer-oriented approach where all actors are engaged. Aim for a cross-sectoral approach. One should try, however, to avoid becoming a generalist with no substantive expertise. One way to do so is by using external experts in the projects. Select a specific need, service, or user group and start from things that can be solved easily. A city s issues cannot be solved in one piece. A common mistake is to

create a big project just to get something off the list, with no aim for long-term development. At the same time, prepare for a long-term process and continuous development, avoiding one-off programs. The best approach is to have a long-term vision, combined with quick and concrete pilots with visible results. A good practice is to create project families, combining easier and quicker projects with bigger and more ambitious challenges. Instead of being launched as massive programs, the projects should be grown from small pilots (for example, proof of concept projects costing about 30,000) into bigger programs (costing up to tens of millions of euros). This way the partners can take part in shorter projects, with no need to commit themselves for many years straightaway. This approach also enables projects to be evaluated before heavier investments are made and makes it possible to get concrete results quickly, not just accomplish project work invisible to partners and funders. Create mechanisms to terminate projects when they clearly are not working. Promote a culture with a license to fail: things can and should be done and tested quickly. This requires honesty and courage, which can only be achieved by building a solid position through successes and strong expertise. Applicability As a light and agile model with no need to invest in infrastructure, the Forum Virium model would be quite easily applicable in other contexts. Although trust and a collaborative culture are crucial for this kind of model, countries with lower levels of trust should not be scared off. Quite the contrary, practical projects with visible results are the perfect way to start building trust among the actors. Development of digital services requires a certain level of infrastructure, but sometimes it may be easier to start from scratch to better integrate different existing interfaces and services. Related topics on the IPP database Open innovation: https://www.innovationpolicyplatform.org/ipp/filters/result-page?topicfilters=12330 Smart cities: https://www.innovationpolicyplatform.org/document/smart-cities-enginessustainable-growth Innovation networks and clusters: https://www.innovationpolicyplatform.org/content/innovationnetworks-and-clusters?topic-filters=11389 Public sector innovation: https://www.innovationpolicyplatform.org/content/public-sectorinnovation?topic-filters=11383

Technology transfer and commercialization: https://www.innovationpolicyplatform.org/content/technology-transfer-andcommercialization?topic-filters=11388 Acknowledgments Jarmo Eskelinen / Forum Virium, CEO Pauliina Smeds / Forum Virium, Communications and Development Director References Chesbourg, H.W. 2003. Open Innovation: The New Imperative for Creating and Profiting from Technology. Boston: Harvard Business School Press. Eskelinen, Jarmo. 2014. Interview with CEO of Forum Virium, March 30. Forum Virium. n.d. Website at www.forumvirium.fi/en.. 2011. Five-years publication. Available only in Finnish at http://events.forumvirium.fi/5vuotta/wp-content/themes/forumvirium5v/img/5-vuotisjulkaisu.pdf).. 2013. Forum Virium Final Report. November. Unpublished. Helsinki Living Lab. n.d. Website at www.helsinkilivinglab.fi. Ministry of Employment and the Economy (MEE). 2013. 21 Paths to a Frictionless Finland. ICT2015 working group report. Publication of MEE.. n.d. Demand and User-Driven Innovation. http://www.tem.fi/en/innovations/demand_and_user-driven_innovation. Tekes Witty City Programme. n.d. http://www.tekes.fi/en/programmes-and-services/tekesprogrammes/witty-city. Von Hippel, E. 1986. Lead Users: A Source of Novel Product Concepts. Management Science 32: 791 805.