In my last story (see Story #13), I wrote about the question of why improvements that worked in one city, take fifty years to be used by others. This question led me into the world of municipal public procurement, a system that seemed designed to serve the bureaucracy more than the people. And to co-founding Citymart in 2011. In partnership with city governments, we created hundreds of projects that showed how delightful and impactful new ways of buying goods and services could be. The result: Public procurement, a system that had caused so much pain and frustration, opened up to new ideas, and helped produce better public services.
Day-Dreaming With Tired Bureaucracies
My all too vivid imagination had gotten me into plenty of trouble as a child. At one point, I convinced all the children in my kindergarten that my family would be travelling to the moon for Christmas. Much to the dismay of their families, whose children complained about their comparatively boring vacations. Maybe it was this imagination that got me to see an opportunity deep inside the bureaucracy of government. Just like I had never been an astronaut, I certainly had no qualifications related to public procurement. But it did seem part of an important problem that I was acutely aware of: Everywhere I went, I found that cities took far too long to improve their public services in ways that work for everyone. Procurement fascinated me because it was everywhere, and yet, no one knew about it. I kept wondering: Could we use the bureaucratic process by which city governments spend money, to help our public services stay with the times?
Our dream was a bit audacious. We were a tiny team with a few thousand Euros in the bank, and no power whatsoever. Municipalities, on the other hand, employed millions of people, and spent almost six trillion dollars, or 8% of world GDP, every year. They buy the goods and services that end up shaping our lives: public services in health, education, transport, social care, economic opportunity and energy all rely on procurement. It was not surprising that when in 2009 we started to float the idea of turning public procurement into a force for good, everyone told us not to waste our energy: “Governments prefer not to talk about it because it is embarrassing that they don’t know how to spend the billions entrusted to them well. Business leaders are afraid to speak up for fear of losing trust of their government clients. And the public only ever learn about scandals, not successes.” But they also agreed that if we could turn public procurement from being a zombie system that puts a break on social change, to becoming a force for better outcomes, it would be a huge win for everyone. So we tried.
Instead of telling suppliers what to do, could governments invite entrepreneurs, movements, and organizations to submit their ideas on how best to solve the problem?
A Beginners Mind
Here is what I had in mind when we started. I wanted more of public procurement to work like the architecture design competitions I was familiar with. Instead of telling suppliers what to do, could governments invite companies, movements, and organizations to submit their ideas on how best to solve the problem? This would be a great way to keep cities open to new ideas. It would also make it harder to keep buying the same ineffective solutions for decades, like Chicago's traffic signals that are of no use to visually impaired people.
This idea had grown on me over the six years we ran a global network of living laboratories. In these living labs, we had helped city governments improve their services by involving people, researchers, startups, and corporations. As solutions came out of these labs, so did the question of how to bring them to other cities. Leaders in those other cities showed little interest in our ideas. Many simply ignored or rejected them. Or they said: “I love what you invented in Tallinn, can we invent that in my city also?”. It seemed incredibly wasteful to reinvent the wheel in every town and city, frustrating inventors, and spending a lot more time and money than building on what works elsewhere. Stockholm spent several years and millions of Euros on a contract with IBM to develop a mobile payment system for parking. For just thirty-thousand Euros, they could have bought a better solution used by nearby Tallinn, Estonia.
Can A $15,000 Pilot Change a $6,000,000,000,000 System?
We spent years trying to overcome this sharing problem. By late 2009, with just twelve thousand Euros in our accounts, we decided to give procurement a try. We invited cities to publish their needs as a competition, open to new ideas. We hoped that this would provide a more orderly process to find the best way to solve a problem. Nine cities took part in this quick and dirty pilot: Barcelona, Cacerers, Chicago, Eindhoven, La Selva, Oeiras, Sant Cugat, Stockholm, and Taipei. Instead of a detailed description of what they wanted to buy, each city posted a clear description of the problem they wanted to solve. Cities promised to pick one winner each, and support them to demonstrate their solution as a real-life pilot. Within a couple of months, 317 innovators from around the world presented their ideas. After another six months, actual pilots got underway in two out of the nine cities. Barcelona, for example, tested water sensors to reduce the amount of water needed to irrigate parks and green areas.
Our experiment yielded some promising results. Cities told us that they learned about many new ideas: 308 of the 317 solutions presented were new to them. This made them think harder about how they could deliver their services. Procurement also made this learning more formal. Each city had a jury of internal and external experts to evaluate the solutions and select a winner. And despite the fact, that we had run this process on a shoe string, and for the first time, it yielded better outcomes than all our elaborate efforts so far. It felt like a real 'Eureka!' moment for us, and we decided to do more of this. We called this process 'problem-based procurement' and 'procurement challenges'.
Cities wanted to tell citizens, businesses, and entrepreneurs: "We are a great place for people who have new ideas. Look, even our procurement is open!"
Do More of What Works
When you want to change things, people keep asking 'why now'? Governments were notoriously sensitive about tinkering with procurement. They were afraid of risks, and lacked imagination of what could be possible. What motivated cities to participate, was not so much a desire to tackle their procurement bureaucracies. What they really wanted was to connect, and be seen together as innovators. They wanted to tell citizens, businesses, and entrepreneurs: "We are a great place for people who have new ideas. Look, even our procurement is open!". Problem-based procurement turned out to be a great way to attract people with ideas.
Cities told us that for the first time, public procurement had provided them a jolt of inspiration, showing just how creative they could be.
To move forward, we needed more evidence to prove that problem-based procurement works. We turned our pilot into an annual campaign called ‘LLGA: Cities Pilot the Future’, that gave governments a way to try out this new idea. This format helped us win over Mayors who were afraid that publishing a problem could be seen as an admission of failure. Our campaign presented cities as a global cohort of pioneers, looking for new ways to update their public services. Within just three years, we had run more than forty experiments. City governments kept getting better at solving problems in this way, opening their doors to more ideas from other cities and social innovators. Cape Town, for example, adopted a proven solution for citizen participation from the small city of York in the UK. Cities told us that for the first time, public procurement had provided them a jolt of inspiration, showing just how creative they could be.
How 'I Trust You' Becomes the New Normal
Every new procurement revealed new insights, often exceeding our expectations. Take learning: Cities learned about thirty new solutions in each procurement. We also discovered that the winning ideas came from surprising places. 98% of winners were small businesses, 50% were minority- or women-owned businesses. Most of them had been unknown to government buyers. Cities found that these new partners did not just offer better ideas, but were also more reliable and committed to good outcomes. Officials found they spent less time managing conflicts with suppliers, and more time on improving services.
Cities were also becoming less fearful, and more outgoing. San Francisco, for example, involved citizens in testing new technologies when the city procured an upgrade of 18,000 streetlights to energy-saving LEDs. Citizens appreciated the pilot installations, but were concerned about privacy. The city ended up saying 'no' to the kind of smart lighting systems that in 2020 led to civil liberties outcries in San Diego, where the city police used cameras embedded in streetlights to surveil participants in Black Lives Matter protests. Other cities invited citizens, and even children, to join the evaluation committees that selected winning solutions. Social and urban innovators rewarded this openness. 93% of participants who did not win contracts reported that they still enjoyed and trusted the process. This reputation for being fair and open paid off, as more than thirty thousand organizations chose to participate in public procurement for the first time.
To keep going with all of this, our team needed a viable business model. We took the simplest path, and shared costs and effort among all the participants. Cities paid small participation fees. Companies helped as sponsors and exhibitors at our beautiful annual events. And every year we had a host city that welcomed program participants and provided the event logistics. As this model began to work, we founded Citymart, to operate and improve the procurement process. With time, we found investors, funders, and partners who shared our dream, and helped us stay on mission.
Things began to change, as the inequities revealed by the financial crisis proved to be stickier than expected. Cities now wanted to use procurement to find ways to tackle some of their chronic social and environmental problems.
Going Local, Going Deep
By 2013, we noticed that things had notably changed. Cities talked less about risks, and more about wanting to use procurement to tackle some of their chronic social and environmental problems. We took this as a sign that they were more comfortable, and willing to tackle more serious issues. At the same time, we noticed that cities had become much better at framing their problems, getting closer to the real social and economic root causes. Their goal was notably less about connecting with other cities, and more about using their bureaucracy to solve problems, and use procurement to communicate their new priorities.
Barcelona was at the forefront of this development, looking to procurement as a way to connect their exceptional skills for innovation, and economic promotion, to the deep social inequities in the city. In 2013, the city's unemployment rate had reached 23.7%, from 5.7% in 2007. Together with the team of Mayor Xavier Trias we developed a new program with the goal of redirecting funding from generic startup support programs to focus on ventures that improve the city. The Mayor wanted to signal that everyone could win business with the city, and make problem-based procurement a part of city operations. The result was the Barcelona Open Challenge, a groundbreaking procurement, worth one million Euros, to solve six urgent needs in the city.
The Barcelona Open Challenge broke new ground by making procurement much simpler, and easy to understand for anyone. Legal documents were concise, and used simple language. It was the first procurement to have a real public advertising campaign, inviting everyone to participate. Where a normal procurement is seen by just twenty people, Barcelona engaged 35,000 citizens in the campaign, and 20,000 more outside the city. One hundred twenty teams presented proposals, many of them upstarts led by citizens. It succeeded as a procurement, too. The six winning solutions ended up using just 70% of the budget. One of them, Vincles, even went on to win the Bloomberg Mayors Challenge, a five million Euro prize, for tackling the social isolation of thousands of elderly people in the city.
In 2014-5, New York City and Moscow followed Barcelona's lead and embedded the problem-based procurement approach in their bureaucracies. Many others followed. Citymart ran problem-based procurements with 135 cities, on all continents. Three thousand public servants participated, and developing their new skills and mindsets. Today, professionals around the world use problem-based procurement more and more, supported by a growing ecosystem of hundreds of consultancies and non-profits who offer support and promote this replication. Their experimentation leads to further improvement, and local adaptations. In one case, practitioners in the Government of Outer Hebrides, Scotland, were inspired by the Barcelona Open Challenge to put citizens of all ages in charge of procuring their new public transport service.
Has all this flipped the zombie system of public procurement? I don't think so. But we may have achieved a mindset shift.
Has the Zombie Been Flipped?
I am writing about procurement in The Slow Lane because it is one of those bureaucratic systems that produces unwanted outcomes in society. It is the cause of frustration and trauma (see Story #12). This story illustrates how we may go about putting our bureaucracies to better use. Has all this flipped the zombie system of public procurement? I don't think so. But we may have achieved a mindset shift, a change in how people think about procurement. Professionals have seen what is possible, and are more empowered than ever to make their own journey to change. It will take many years to change bureaucracies. Communities are taking the first steps, and their old zombie systems are starting to look a lot more like Slow Lane movements. As they re-imagine what is possible, they breathe new life into procurement.
That's a big shift from 2009, when all change was unimaginable. And what we imagined then, has now come within reach. If you look carefully, you can even see examples of the Slow Lane Principles (see Story #4) practiced in public procurement. (If you are interested in more examples, take a look at my report on the emerging future of city procurement for the Chicago Council on Global Affairs - 'Serving the Citizens, Not the Bureaucracy').
Is this the beginning of the end for these zombies?
Thank you for reading my story. Please get in touch with feedback and ideas, I would love to hear from you. In my next story, I will conclude this chapter about zombie systems, what they mean for the Slow Lane, how they work, and what can be done about them.