Hey Mayors! Five things on what your city did for entrepreneurs, diversity & innovation in 2019
We know almost nothing about how our city halls spend trillions of dollars every year on the services that shape our lives — like our health, education, environment, transport and culture. What we do know is that things aren’t all great — critical problems like homelessness, air quality and inequities have persisted for generations. And yet, Mayors seem more hopeful than ever. They hope to tap into innovation, entrepreneurship and technology in particular to find new answers.
We found little meaningful information on how cities are actually changing their ways. So we decided to embark on a unique experiment: we read every procurement published by cities and counties in the US, Canada, UK and Ireland. You can read the full report here.
In this post, I will highlight five useful findings on how much innovation we are doing, what sectors we innovate in, the difference between big cities and smaller innovation hotspots, how we measure progress, why the UK is ahead and importantly, the basics we need to just fix.
1/ Does opening 0.5% to new ideas feel about right?
Cities opened less than 0.5% of their procurements to new ideas in 2019. Will this move the needle on their self-declared climate emergency, among other chronic problems?
In 2019, cities and counties opened less than 0.5% of their procurements to new ideas. Is this good enough? On average, cities published 2.1 innovative procurements over the course of the year. For the 14,000 residents of Canmore, Alberta this is a great show of a small government looking for new ideas in transport and economic development. Whether two innovative bids are sufficient for Toronto’s 2,930,000 residents that the city is taking urgent action on climate change, economic inclusion and housing as per its strategy seems less convincing.
In 2019, many Mayors declared wars on transport inequities, homelessness, housing crisis, opioids, obesity and lacking social mobility. Some of these priorities are reflected in the themes cities choose to innovate in (see next point). Yet, only a handful opened themselves up to new ideas through procurement in their self declared ‘priority challenges’.
Let us illustrate how this played out in climate change and affordable housing. In 2019, more than 615 cities in the markets we covered declared a climate emergency during the period of our study. 83 of these cities published 110 innovative procurements related to climate change (environment, planning, water, waste, energy).
Mayors of cities large and small report that affordable housing is among their top three priorities. This has not translated into a lot of action to invite new ideas through procurement — just nine procurements were published by seven cities / counties in 2019 that created opportunities for innovation in housing. The City of North Vancouver, for example, procured its Balanced Housing Lab in 2019, a co-creation process involving diverse groups of residents in exploring new policies and prototypes to deliver more affordable middle income housing.
And lastly, Mayors everywhere want more participation of small, creative and disadvantaged businesses. We continue to see evidence that opening procurement to new ideas gives these groups a fairer chance of success — and could unlock $500bn in economic opportunity by 2029.
2/ Yes, cities innovate in transportation. And then what?
Across geographies, transportation constitutes about 20% of innovation activity, followed by infrastructure, energy and government. But cities have very distinct innovation profiles.
Vancouver (CA) innovated in transport, infrastructure, waste, energy, environment, government, finance and civic engagement. Austin (TX) innovated across almost all categories: planning, transport, waste, water, energy, IT, government, food, civic engagement and libraries. Bradford (UK) innovated in civic engagement, social care, energy and economic development. Chicago (IL) innovated in food, energy, transportation, health, civic engagement and energy.
Civic engagement seems to be a high priority area for innovation across many profiles and whilst only 3% of procurements are explicitly smart city themed, we can classify about 50% of procurements to be smart city related.
3/ Big cities vs innovation hotspots
Seven out of the top ten innovation hotspots (which measures per capita output of innovative procurements) were cities with populations of 100–250,000. Vancouver (#4) and Boston (#5) with 630,000 inhabitants are the largest cities in the top 10. The only cities in the top 50 of a million or more inhabitants are Austin (#15) and San Jose (#27). The largest cities like London and New York City rank in #150–200 range.
This should come as good news to small and medium-sized cities with populations of 100–650,000 who can use their comparative agility to drive innovation at a scale where it can be felt by their communities.
Boston is a case in point: is delivers almost the same absolute level of innovation as New York City at less than a tenth of the size. The city innovates in planning, transport, energy, IT, government and social care making it a pioneer of what the future of public services might look like. Spoilt as the city may be by its scientific, academic and startup prowess — cities like Vancouver, York, and Bradford are all competitive given that we are still at a very early stage with just 0.5% of procurement allocated to innovation.
4/ Cities manage what they measure
We found that cities in every region and of all sizes have taken the first step of publishing procurements open to new ideas. But if we are to harness the potential of our spending, we need to begin to manage it actively. Most cities report mainly on activities, like how many of small business information events they organized. It is time to pay more attention to what you measure in procurement to assure that you get the innovation, civic engagement, local economic development and inclusion of disadvantaged businesses are a priority you, how are you measuring progress?
We found a lot of diversity in measurement. The 2019–2023 Procurement Strategy of Blackpool, a leading procurement innovation hotspot in our ranking, provides an overview of the goals and metrics used to improve their performance of procurement — including innovation.
(Note: We compiled a list of questions to ask procurement at the end of this post).
5/ Oh, and fix the basics, please!
Small businesses suffer most from bids that are open for less than 28 days. And yet, 25% of all innovative procurements we found did not meet this basic requirement. It is worth naming the worst offenders, as they are also high performers on innovation: Greater London Authority, Liverpool, Vancouver, Edmonton and Sheffield.
Many of the leading innovators overlook the most basic requirements to allow entrepreneurs and small business to have a fair chance.
Procurement portals are another good example of how government may mistake itself as the most important user to please. Today, low participation rates in bids are an urgent problem that leads to poor outcomes, overspend and lack of local development benefits. And yet, only 20% of US cities make it easy for small business to achieve this task — with 25% providing no navigation to bids from their homepage. Atlanta has shown how easy it is to fix the basics, leaping from 27th to 1st place by putting discoverability first.
Our research confirmed something we suspected all along: the choice of procurement portal for a city is not co-related to innovation or small business accessibility performance. It matters more how easy it is to find an RFP than how fancy the interface or backend is that manages the process.
But it also speaks to how the UK seems to be more focused on human and social outcomes over placing bets on technology innovations.
P.S. Some interesting questions to ask from procurement
- At what stage of the process was the procurement team consulted?
- Is the procurement team considered to be knowledgable about different service areas, and do they proactively highlight opportunities?
- What percentage of businesses in my city are not participating in bids (avg today: 99%)
- How easy is it for businesses to discover and participate in bids?
- How many of our bids strengthen our city goals and urgent KPI (e.g. the climate emergency)
- What percentage of our bids are open to new ideas and provides a pathway for entrepreneurs to shine?
- How many proposals do we receive on per bid?
- Do we know how many vendors dropped out of the bidding process and why?