The state is a service, the city is a partner and a platform for innovation, start-ups are the driving force, and large corporations are the support. This is the perfect formula for Ukraine's innovative development.
In September, the SMART CITY ODESSA 2020 forum was held with the support of SYNCHRO SPACE and a discussion panel on "Innovative urban development: how to build cooperation with startups and corporations" was held.
During the discussion, the speakers analyzed practical cases of implementing smart solutions at the interface between different parties: government, business, and active community. They also tried to find ways of effective interaction, taking into account the existing conditions, obstacles, and prospects.
Each of the speakers is constantly implementing transformations at different levels, influencing the future development of our cities.

Speakers of the discussion panel:

For more than two years now, SYNCHRO SPACE has been helping to solve the problems and challenges of cities with innovative projects by start-ups and specialists in various fields.
Typically, cities cannot solve their problems with the help of internal teams, and it is crucial to go beyond and implement new approaches. And one of these approaches is to set development tasks for innovative startup teams. On the other hand, this helps to create and develop startups that receive orders from the city and the opportunity to scale their activities.

However, there are few problems that we face and try to solve in our activities at SYNCHRO SPACE:

Dealing with cities means a lack of understanding of what innovation and smart solutions are, a lack of acceptance of new ways of solving problems, and a lack of understanding of the importance of technological development.

Working with startups means a lack of understanding of how to build cooperation with the city. How to sell your solution to the city and implement it.

Interaction between cities and startups means ineffective communication between startups and cities, different visions and approaches to solving problems.

Project financing means the lack of an effective procurement model for innovative startup solutions.

Studying the experience of Western countries, we see that countries that support startups at the state level have high economic performance and rapid innovation development.

Last year, Ukraine also made a "breakthrough" in this direction with the launch of the Ukrainian Startup Fund. In December 2019, the Fund began accepting applications from startups, which also marked the beginning of their state support at the official level. This is a big step forward, as the USF will become a driver of entrepreneurship, innovation, and, in general, the country's economic growth if developed systematically.
The state is becoming a service with a person at its center.
Today, the Ukrainian state should become a service that helps rather than hinders. Vadym Bortnyk spoke about the strategic directions of digitalization development. Namely, about the Diia app, which is one of the steps towards the digital transformation of our society, as well as about the main challenges that need to be addressed in order to become a "State in a Smartphone".

Another step towards digitalisation is the creation of a public services portal, where you can apply for any public service around the clock and in a matter of minutes without queues and unnecessary bureaucracy. If a service is not available online, it will not exist on paper. The main goal of creating such projects and services is to make the interaction between citizens and the state as transparent and efficient as possible.
We are not digitalizing the bureaucracy, but completely changing the logic and approach of the state to interacting with people.
Everything that is done in the Ministry in one way or another "lands" in the regions. And the effectiveness of certain decisions depends on taking into account the regional context and clear communication with the regions. Therefore, it is necessary to establish links not only to inform about digital projects, but also to include cities in the development of these products. After all, each city has its own experience and practical cases to share. The digital literacy of people is also important. To this end, we have created training series to help people in all regions learn digitalization tools.
–says Vadym Bortnyk
When talking about cooperation between cities, businesses and, in general, the development of an ecosystem that will allow businesses and start-ups to grow and be on the global map, it is worth considering the level of maturity of this ecosystem. It is clear to everyone that ecosystem development requires resources, people, government support and mechanisms to turn an idea into a successful startup. The level of maturity of the ecosystem contributes to the development of certain elements.
We see a lot of positive things in Ukraine, but we are still quite far from developed ecosystems.
Cooperation between modern cities can be divided into three types:

  • The city is a "black box". A closed city where decisions are made behind the scenes, without the participation of citizens.
  • The city as a service provider - the city provides services to the population, and the population, in turn, helps the city develop and pays taxes.
  • City as a partner and platform for innovation.
In Ukraine, different cities are at various stages of development, and it is still a "black box" mostly. And somewhere it is already a "service provider" and perhaps somewhere there are cities that are platforms for innovation.

Strategy is the starting point for any transformation.
Most Ukrainian strategies are declarative, populist, and "for all the good and against all the bad".
In Ukraine, I have not seen a single written strategy that would answer the question: what are we doing? Why are we doing it? How will we achieve this? What is unique at the local and global levels? All subsequent stages and actions that will take place should correspond to a specific point of the strategy."
- believes Oleksandr Krakovets'kyi.
There is a misconception that a smart city is about technology. Indeed, technology is a crucial component of this process. But transparent processes and rules automated with the help of a particular infrastructure are more important.
Speaking of building infrastructure and smart solutions, you need to start from the top. This requires rapid collection of relevant data, publication of open data, cooperation with corporations, and a technological sandbox for pilots. In other words, this is a complex infrastructure that should consist of completely different providers. Interoperability is crucial here - it is the ability of different IT systems to interact with each other by exchanging data (signals/events). In other words, data should run, not people. Unfortunately, there is no interoperability in modern cities.
An important step is the development of a partnership ecosystem, which includes the creation of competence centers, programs for educational institutions, incubators and accelerators, angel investments and grants, piloting startups at the city level, and "bridges" with other cities, countries, and ecosystems.
Equally valuable is the positioning of cities. It is not enough to say that our city will be a center of innovation. Each city needs to understand its peculiarity and how it differs at the local and regional level.
What is your vision of the principles of development and transformation of cities and communities? Describe the main steps using real cases as examples
To solve a problem, you need to understand and acknowledge that it exists. When you admit that your utilities, departments, and people responsible for crucial areas in the city are not working effectively, further cooperation with the community and startups is completely different," says Maxim Bakhmatov.
"Nothing will work until there is an audit, real figures, and an understanding that there are problems. The case of 4G in the Kyiv subway, which had been unresolved for eight years, shows that we can achieve a quick result after recognizing the problem and organizing transparent cooperation with corporations.
Officials should not make subjective decisions.
An example of such a decision was the story of the purchase of cameras for the city of Kyiv, which were supposed to determine whether a person was sick with COVID-19 or not. The cost of this decision was UAH 65 million. After an expert study, a small scandal, and the mayor's realization that this was a potential fraud, the cameras were not purchased, and the manufacturer withdrew the product from production and sale. "Measuring the temperature outside has a large margin of error, and it is simply impossible to clearly identify who is sick and who is not," says Maksym.
Small communities with a small amount of money can develop faster and more dynamically than large ones. Vinnytsia is a great example. In 2007 they set up a transparent office and then began systematic work on updating the rolling stock of the city's transport system. Other cities started to follow Vinnytsia's lead. Lviv has an IT Arena, an anchor event where all entrepreneurs and IT specialists come together. And they all understand that they need to come to this conference once a year.
says Oleksandr Krakovets'kyi
These are positive stories, but the problem is that they are not comprehensive in one city. And it is impossible to call it a full-fledged ecosystem.
There are motivated people in small communities who can do something and create something. But even when they want to do something, they usually do not find support and do not know where to go. They come to Kyiv or other cities with a population of over a million people, get enthusiastic, return home, and want to do something, but the conditions are limited. Therefore, it would be right to create a framework for small communities and use it as a typical solution for territorial communities, medium-sized cities, and cities with a population of over a million," advises Oleksandr.
This year, SYNCHRO SPACE has started cooperation with smaller towns and territorial communities. Indeed, we see a wast demand from small towns for innovative teams and solutions. After all, they do not have their own staff, specialists and start-ups that can offer innovative approaches.
I see communication for digital transformation as the number one task. After all, the biggest problem now is the lack of understanding among decision-makers of what digitalization is and why a particular city or community needs it. Here the work consists of several parts. On the one hand, it is necessary to "open the doors" to businesses that come to the mayor and offer their solutions to improve the convenience and comfort of citizens. On the other hand, there are examples of active communities that apply these solutions. After all, this works better than the tasks set by the Ministry.
– thinks Vadym Bortnyk.
Of course, there are obstacles: heavy bureaucratic procurement procedures or lack of transparency in some decision-making processes in territorial communities. For a leader, digitalization is a management process where he or she can control and see all stages of decision-making.

It is important to build institutional capacity for digital transformation. And the creation of a CDTO (Chief Digital Transformation Officer) school for staff training, which includes an understanding of change management, and technical and bureaucratic issues of digitalization, will help.

Vadym spoke about the three main projects currently being implemented by the Ministry of Digital Transformation:

  • Digitalization rating to determine the digitalization index of regions
  • Creating a portal for communication and experience exchange with a single entry point for hromadas
  • Procurement project - a marketplace that structures all products and helps to choose the best solutions
In practice, one of the problems with digitalisation is the lack of powers of the people responsible for it in the regions. There is a fear that the wrong decision will be made and the Security Service of Ukraine (SBU) will come, and local ATCs do not have sufficient experience in choosing such tools.
Free tools are the path to poor digitalization. After all, all the best products are usually fee-based. The cost of software is not only the cost of the license but also support and ensure that it will work. Therefore, at the state level, with the participation of relevant experts, it is necessary to create a standard set of recommendations for cities and towns. If the city does not have the funds to purchase these licenses, it is worth going once and ordering a solution from third-party consulting organizations or IT specialists. Once to pay for this framework, and then distribute it for free, or for some conditional support.
The current approach to procurement does not involve support for software products. Most often, it turns out like this: we buy it, develop it, put it on the balance sheet, write a user and administrator manual, and that's it. No one is engaged in support, and the next updates may be in six months, a year, two years, or never. Because there is no money a new tender needs to be held, or something else has changed. Very often, instead of iteratively improving the product, a solution is purchased every two years, used, discarded, and a new one is purchased again," says Oleksandr.
"One of the best solutions that the government can create now to simplify digitalization is to adapt legislation and processes to the way software is logically created and maintained."
What is the source of innovation: where do innovative solutions come from? How to create conditions for the systemic development of innovations? How to stimulate and support them?
Using Radar Tech as an example, we realized that the state is an ineffective leader and manager, and decided to develop innovations on our own. Speaking of software solutions, we created a corporate accelerator that conducts study tours across the country at the expense of large corporations. About a thousand startups were involved, and about 20 received direct contracts with large corporations, resources, and the opportunity to develop further. We have created a systematic approach to developing corporate innovations exclusively with Ukrainian startups.
- Maksym Bakhmatov shares his experience.
UNIT City has become a combination of hardware and software solutions, with more than 150 innovative companies from Ukraine and abroad. 90% of them are product companies and start-ups that can cooperate in one place and create an ecosystem together.
Unfortunately, UNIT City is an exception. State or municipalities sponsor 90% of the world's innovation centers. These states understand that it is necessary to build hardware solutions to keep these people in one place and concentrate.
Of course, it is impossible to give away these areas. But it must be done under strict conditions, as, for example, in China. There, a startup is offered benefits for six months, a year, or three years. If it fails to deliver results, it is harshly "thrown out" and the next startup is accepted. Interestingly, there are more than 100 centers like UNIT City in China, and their development began 40 years ago.
I would work on concentration and systemic assistance with hardware solutions from the state or cities in Ukraine. And I would let private companies deal with the software.
Today, I don't feel that the state can allocate 40 hectares and build 500,000 sq m, allocate funds for training, and not steal them. Perhaps, private companies should be allowed to do this, if the state is still weak," says Maksym.
Oleksandr Krakovetskyi also shared his personal experience:
"With our project, which many abroad consider innovative and appealing, we have won various competitions, completed three acceleration programs, received exactly zero investments and funding, and zero contracts thanks to these programs. And by all accounts, our project should be closed.
The problem is that there are various events, networking, and forums in Ukraine, but unfortunately, they do not lead to positive results and contracts. Why do people attend Web Summit and Smart City Expo? Because these meetings end in real contracts! Young startups need confidence that what they are doing is a priority.
Today, many entrepreneurs have given up on Ukraine and started looking towards foreign markets. If they are told in no uncertain terms: "We are not interested in your solutions" or "we have no money and resources." startups start to leave. And it's not just about jurisdiction or registration. Unfortunately, no Ukrainian startup that wants to achieve global goals starts its expansion with Ukraine.
Speaking of smart cities, not just the digital component is crucial. Very few smart city startups can exist without urban infrastructure. Therefore, every city willing to cultivate a startup ecosystem and startup culture must have ways to incubate these projects.
In Kyiv, we have Salyutna Street positioned as a smart street with smart lighting. But it would be nice if every city had a street, factory, or medical facility where it is possible to incubate such projects and allocate money. After all, a startup doesn't need millions at the beginning. They need to check whether their idea will work and how much it will cost.
Accordingly, 90% of smart city innovations will die without the possibility of incubation. The same goes for companies. It's nice that more companies are ready to work with innovations. At least they declare they are looking for these innovations and are ready to consider them. But this needs to be strengthened.
Only cooperation with business can lead to results in Ukraine.
Are there effective models of cooperation between municipalities, innovative businesses and active communities: what do you think is the ideal model?
I like the model of cooperation that Microsoft and other large companies are building. After all, I, as a company, can decide in which category or competence I can cooperate. There are different levels and criteria of partnership and a transparent system because everyone is on an equal footing and understands their strengths and weaknesses.
When a municipality comes and holds software tenders, in most cases simply looking for the lowest price, it is a road to nowhere. After all, innovations are priced in a completely different way and, in a good way, the state should prescribe criteria for who can become its partner and in what area. Independent companies decide whether they want to become partners of this state or not. When, during procurement tender, five companies with proven experience in this area come forward, it increases the transparency of the procedure. The idea is that the process should be transparent. Estonia, Denmark, and Sweden have already developed a similar approach." says Oleksandr Krakovetskyi.
Firstly, we need to work in several areas: provide infrastructure in terms of digital services and digital identification, create transparent conditions, and not interfere with business.
Communication is important, as well as communicating the value of digital transformation, adopting best practices and cases, training digital transformers, and supporting and creating tools to help at the legislative level. - Vadym is convinced.
I am quite aggressive about any cooperation with the state or municipalities. I see how inefficient it is and how much money goes to waste, not even speaking about corruption and theft. - says Maksym Bakhmatov.

When creating the Transformation Office, it was clear that we needed two things:

  • Get a partner who can help plan a detailed audit of what is happening in the KCSA in general
  • Conduct an audit with international experts so that there is no thought that we are doing something illegally.
In other words, we do a detailed audit and understand how much has been done inefficiently. Then we start to develop areas that are more necessary here and now. It's all about audit, "cleaning out the Augean stables", new people, fresh ideas for large budgets with transparent management and analytics of what is happening.

Today, cooperation with modern municipalities is like pulling a hippo out of a swamp, except in small communities. In small towns, everything is visible at once, while in large cities, unfortunately, all innovations will either cover up corruption or be ineffective.
We thank the speakers for an exciting, dynamic, and valuable discussion!
Each of us has our own point of view and vision of controversial issues, but it is in these areas that we find the bottlenecks, which means we have the opportunity to resolve them. The most important thing is that we are united not only by our aspirations, but also by real actions towards the development of our cities and innovations' implementation.
Practice and relevant cases show that we have to work on a lot and start with the desire to create. After all, everyone can influence the future of our cities with their knowledge, experience, and ideas. Collaboration and responsibility for the results of our actions today are crucial. For this, we need a clear legal framework, transparent terms of cooperation, and financial opportunities.
We hope this discussion will give rise to more efficient and rapid development of innovations in cities and our country.
Author of the article: Yana Kononova
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