A New Approach to Creating New Markets: From Proof-of-Concept to Implementation

Estonia has led the way in terms of digital transformation. Now, the country is exploring whether it can develop the standard for dealing with very tricky market failures.

In close collaboration with the tech ecosystem, the Estonian government is currently exploring which public domains are ripe for disruption, and building models that would bring about that disruption via Accelerate Estonia (aEstonia).

Policy design

The second global edition of the Startup Nations Policy Hack in Surabaya, Indonesia last November was a key stepping stone in preparing for this new policy approach.  Mikk Vainik, startup policy advisor at the Ministry of Economic Affairs and Communications, having co-designed the Policy Hack exercise, knew this would be an opportunity to help move his idea forward.

He brought to the table a proposal for a new tool for public sector innovation to open new markets, and called for peers and experts attending the event to consider joining his team to contribute to building out his vision. The problem was announced as follows: "There is a lot of innovation hidden in the public sector in Estonia, but these ideas are seldom brought to the public. One of the few lucky policy ideas has been the e-residency program, which has already had a profound effect on the Estonian economy."

Mikk proposed designing a system by which ideas of similar potential can come to fruition, taking into account how e-residency became a reality. He proposed a new approach for the government to choose concepts which have the potential to create new markets and solve some of the thorniest issues in the country.

The process would begin with an idea competition, from which up to five would then receive support to work on a minimally viable policy. Those with good results would receive funding to fully build out and implement the product or platform within the public sector.

Via team work to fine-tune various aspects of the proposed policy instrument using tools such as the Lean Policy Canvas, Mikk returned home from Indonesia with a more precise solution in mind, and further refined it until the beta launch in March 2019. 

The implementation

The policy proposal received top-level support and funding under the Startup Estonia framework. As an economy fueled in large part by entrepreneurial innovation - Estonia boasts the largest number of unicorns per capita - it was not too hard to convince the government that market-opening innovations are time-sensitive and therefore demand fast action from the public sector.

Viljar Lubi, Estonia's Deputy Secretary General for Economic Development, explained the rationale for launching this new initiative: "In the public sector, everything is equally important. In the private sector, some things are more important than others. In the public sector, we don't have that luxury. Through this accelerator mechanism, we try to concentrate the attention of top management, civil servants and politicians on a few particular projects and try to deliver.  These are projects that have the potential for creating new markets, but where the private sector cannot step in before the government puts its house in order. Take the example of autonomous vehicles. Even if the companies have the technology ready, they cannot come to our roads if the government is not ready."

"Implementation is the hard part," Mr. Lubi stressed in a recent interview with GENHis advice to other nations: "Don't try to fight all the wars, but pick a few and go into depth to try to deliver".

Regarding the role of policy hacks and sandboxes in developing new policy solutions or new approaches such as aEstonia, the Deputy Secretary General explained that governments benefit when they experiment with new policies, adjusting them in a more isolated environment before actual, full implementation. "Launching a new policy is relatively easy. Ending one is harder," he emphasized.

Cristina A. Fernandez

Vice President for Policy + Research | Global Entrepreneurship Network

Cristina Fernández focuses on integrating public officials into startup ecosystems across the world, creating platforms for them to exchange ideas… More