Better get the revolution to happen in your own region
Last February, the first Dutch Blockchain Hackathon took place in the City of Groningen. According to the organisers, it was the biggest blockchain hackathon ever. The event was attended by 400 people from more than 50 organisations and over ten countries. The participants were organised into 55 teams, working on blockchain-based solutions in five tracks: Identity, Energy, Future of Pensions, International Trade & Entrepreneurship, and Reinventing Government.
Policy Context
The Dutch Blockchain Hackathon is an initiative of DutchChain, a company owned by Rutger van Zuidam. The company develops blockchain-based software and organises "ecosystem events" (like this hackathon).
The organisers of the Dutch Blockchain Hackathon recognise that most of the applications and innovations in blockchain revolve around Bitcoin, and that blockchain applications seldom find their way to consumers or end users. They say they want to bridge the gap between organisations providing cases and the people able to come up with solutions, and help create a network where larger, older organisations from both public and private sector can experiment and work together with other, younger companies and create and scale up really groundbreaking innovations.
Our goal is to involve and strengthen the entire ecosystem of government, corporates, the scientific community, startups and grownups, and really start accelerating blockchain-based solutions. That's why this hackathon is a year-round innovation cycle, instead of a 54-hour weekend, to make sure everyone's on the same page and actively involved, and great ideas to improve society can become a reality.
World-changing technology
The organisers refer to the World Economic Forum (WEF), that has defined blockchain as one of seven potentially most world-changing technologies, with possible uses ranging from healthcare, the food industry, energy, and smart industry, all the way to logistics and government.
The advisory board of the Dutch Blockchain Hackathon includes Bas Eenhoorn (the National Commissioner for Digital Government), Willem Vermeend (Dutch Government Fintech Special Envoy), René Penning de Vries (Director Dutch Digital Delta, Ministry of Economic Affairs), and Lex Hoogduin (part-time Professor in monetary economics at the University of Groningen).
Description of target users and groups
The organisers of the Dutch Blockchain Hackathon have managed to involve an impressive number of partners and sponsors. The partners include the Ministry of Economic Affairs, the provinces of Drenthe and Groningen, the University of Groningen, the Chamber of Commerce, financial services giant ING, the Dutch national bank (DNB), and the Dutch Authority for the Financial Markets (AFM). Among the sponsors and supporters are Delft University of Technology, several energy companies, two pension funds, several IT companies, and several companies specialising in blockchain technology.
Disruption from the inside
Stefan Kunst, the Innovation Projects Developer at the Dutch Province of Drenthe, is also involved in projects in the northern provinces of Friesland and Groningen. My job is to disrupt government from the inside. I help capable people with great ideas to work their way through bureaucratic inertia.
When Rutger told me about the blockchain, I immediately understood its potential. It's just like the Internet itself; you don't have to understand the technology to see its importance.
The stereotype is that all people in the northern part of the Netherlands are farmers, so naturally the politician responsible for Economic Affairs in Drenthe is a farmer. When I explained to him what blockchain could do in rural terms — for example by reducing the number of hoops he has to jump through when he wants to build a new chicken shed and apply for a subsidy — it took him only five minutes to see the potential. So the Province of Drenthe made available EUR 10,000 and told me to go for it. The main condition, of course, was that I had to get as many companies and knowledge institutions from the region as possible to join this event.
So while Rutger was running all over the country to get everyone involved, I was going door to bring in companies from our region. Before the hackathon, we also organised a lot of regional and local meet-ups ourselves. Since blockchain is a very young technology — IT companies in the region may have heard of it or even experimented with it, but none is even close to having a demo, let alone a product — most of our work was educational and activating.
Business
Kunst recognises that the blockchain technology may be seen as a threat by civil servants, since transparency is an inherent part of blockchain. This revolution is going to happen anyway, so you better be prepared, and you better let it happen in your own region first.
If blockchain really becomes as important as the Internet, it will affect all sectors. That's why our tagline is 'co-creating the next operating system for our society'.
In three to five years, it may result in a lot of new companies and jobs. If the Internet of Things (IoT) can make devices smart, blockchain can make them part of the economy. And having a lot of farmers doing a lot with IoT in our region means that these devices do not have to be used just to collect data; they have to create business.
Description of the way to implement the initiative
Track innovators
An innovation to the hackathon concept itself is the use of so-called track innovators and super accelerators. Rather than having another guy opening his laptop to do a presentation, five different tracks were organised, each having its own theme, Kunst explains. Each track also had its own sponsor organisation, the track innovator, bringing in actual use cases. These organisations committed to help anyone solving one of these cases — or making a good start during the hackathon weekend — develop this solution into a product. That can be in the form of funding, or by providing (or acting as) a launch customer. So the sponsors are committed not only to the event itself, but also to its outcomes.
It's important to recognise that you need to get all different sorts of parties involved. To get your idea going, you need startups, students, government and commercial companies, all bringing in their specific ecosystems.
Super accelerators
The super accelerators were another way to turn the outcomes of the hackathon into something useful. Normally there would have been a jury announcing winners, Kunst continues. Having big shots around like Alexander Rinnooy Kan (President of the Dutch Social Economic Council), Chris Ferris (CTO Open Technology at IBM, and Chair of the Hyperledger Technical Steering Committee), Nicolas Cary (Co-Founder and President of Blockchain), and Lex Hoogduin (part-time Professor in monetary economics at the University of Groningen, and former member of the board of the Dutch central bank DNB), we did not want them to answer the question 'Who has won?'. Instead we wanted to know how they could help these winners. So we spent the whole Sunday afternoon accelerating the teams. I'm definitely going to use this concept in some other innovation projects I'm involved in.
A related innovation is the hackathon impact canvas, based on the concept of the Business Model Canvas. It was used by the teams to specify what was needed for the next 100 days to turn their idea into a success. As a consequence, having great IT specialists was not enough for a team; they were also judged on the business side of their solutions. Of course, they did have help from the business partners present at the event. Even stating in your 100-day plan that you will be needing this capability was okay, as long as you recognised it. So the whole weekend was not about getting the best solutions, but focused on getting the best teams with their solutions.
This is another idea that I will be borrowing for use in the region. I see a lot of startups failing, and an important cause of that is a lack of business and soft skills. Their product might be good, but that is not enough if their business story is bad. Hopefully another approach will help to increase the success rate.
Reward money
This businesslike approach was also visible in the way the total amount of EUR 50,000 in reward money was distributed among the teams. Each track sponsor handed out fourty frisbees, each representing EUR 250, for specific qualities, for example clean coding or open sourcing. That made the money more of a reward than a traditional prize.
Main results, benefits and impacts
Tagging blocks of energy
For the northern Netherlands, energy is an important issue, Kunst explains, so this was a separate track, sponsored by energy companies Gasunie, Vattenfall and Nuon (owned by Vattenfall). In this track, a solution was developed for tagging energy, differentiating between green gas, green energy and green biogas.
In this case, the source publishes on the blockchain the exact origin of a specific block of energy, for example: this kilowatt-hour of green energy was produced by this particular solar panel, this Dutch wind turbine, or this Norwegian hydro plant. So if you want to be super-local and super-efficient, you can be sure that your energy has been produced in Groningen using solar power, backed up by producers in Veendam, Assen and Groningen — all, of course, based on a smart contract also published on the blockchain.
Equipped with a blockchain with a public ledger providing an audit trail showing the origins of their energy blocks, consumers can be absolutely sure where their energy is coming from. And according to Kunst, that is why energy companies are so interested in this technology. If these suppliers can have the tags added by their production units, they add value to the system, and it will give them a role in a future distribution system that will give a giant boost to locally produced energy. That's why this is so interesting to the northern region.
Track record of sharing
Interdependencies
Although Kunst's work officially always has to have a regional impact, he admits that keeping too strictly to this requirement would be practically impossible. If I as a civil servant am staring just at my own region, nothing will be done. Something like connecting the Dutch central identity management platform DigiD to a blockchain needs to be taken on by the national government. That's why there was a separate track on Identity, sponsored by the 'Rijksdienst voor Identiteitsgegevens' (the central agency for identity data).
So meeting with other cities and regions, to identify shared problems, opportunities and needs, is an important part of participating in events like this hackathon. In order to move forward in a world full of interdependencies, individual administrations at lower levels need help from both their peers and central government. Sometimes you have to team up with your peers, or go to The Hague or Brussels, to influence something that is bigger than you, to get things done.
Community
In addition to the annual hackathon, an online community has been built. When you are going to incorporate the next operating system for your society, you need a valid ecosystem, Kunst says. So the role of the community manager is to get a balanced ecosystem, including government, companies, ICT people, programmers and so on. What we have learned is that if you have a lot of programmers and startups, suddenly Deloitte, Exact and ING are interested. And if you have these companies on board, suddenly all kinds of government organisations are interested. And so on. It's like a chain reaction.
First, the community is a way to get people involved and get the hackathon organised to form teams and to organise meet-ups. Second, members are actively pointing out interesting things like blogs or other events to each other, or creating their own content. And if a company wants to start a blockchain project, it is a platform to find knowledge and interested people.
At the same time, Kunst recognises that there is always the danger of companies using the platform to recruit talented people. That's why the community manager has to be the king of the castle. If a ministry and ING start a blockchain project to make the world a better place, of course they are very welcome. If a company is just recruiting, that would be something completely different.
Fortunately, the companies involved now seem to understand that they don't need to present their corporate faces all the time, and that they need to contribute to the community as well. For example, Deloitte sent in five of its best business people to help the teams during the hackathon. And the same is true for Delft University of Technology: they didn't contribute in a monetary sense, but they brought in help for the teams.
Get involved
As a matter of fact, we did a similar thing from our side, Kunst continues. I arranged for many colleagues of mine, from the northern provinces, universities and other organisations, to serve as track mayors for the teams. We could explain from our experience why certain solutions would or wouldn't work, because of the way government processes are organised, legislation, theory, knowing the region and its people, and so on.
That was actually an eye opener to me: that we as a workforce of civil servants could create value by sharing our knowledge and experience with teams from a completely different background. That's why as a government, just giving money is not enough. You have to get involved and participate in the projects. Because if you don't, you are just buying off the fear of missing out on innovation. The outcome will have nothing to do with reality, and it will be unusable.
Lessons learnt
Mentality
According to Kunst, however, the mentality of government organisations makes it very hard to work in this way. Since this event took place during the weekend, I had to cancel plans I already had with my family, and my wife had to take care of the children. But I thought: 'There are fifty teams coming in this weekend to work on some of my issues. How can I not be there?'.
The problem with civil servants is that they never have skin in the game. Even if they screw up big time, they will never be fired. They may get reprimanded, but that is all. I used to be a soccer player, and at the end of the match you knew exactly who had skin in the game.
For civil servants, it is never their own money. In this project, it is Rutger's money. If this undertaking turns out wrong somehow, he may have to sell his house. That is a huge problem with governments at all levels. They need to find a way to get their people to put heart and soul into their work.
Heart for the case
Still, Kunst managed to get a lot of people involved and bring them in. There were eight people from the northern provinces there for the whole weekend. But those were all from my personal network, people I work with on a daily basis. So they trusted me when I explained to them how amazing this was going to be. Only one of those I had reached through the normal channels of my professional network.
What we need is brave politicians, who say 'Okay, you are my gambling civil servant: go ahead and we'll see what happens.' At the same time, you need to hire people who are really involved in the issues they are working on. If you need an IT policy, you should get a nerd, not someone from business school. Why do overweight people who never ride bikes work on cycling problems in a traffic and mobility department? Obviously they don't have the heart for it. That is so different from the people who work on the environment, for example. These are biologists wearing wooden shoes, going out into nature. To them, being a civil servant is not about building a safe, predictable career, but a means to contribute to the issues they care about.
Change
It turns out to be almost impossible to improve the quality of the people working at the lower levels of government. An IT specialist at a smaller municipality, for example, will never have a salary comparable to his or her colleagues at commercial companies, and will never have any peers in their own organisation. As a consequence, they will never develop into a strong professional — or, as soon as they do, they will leave for a better job.
I often find myself skipping local government and going directly to entrepreneurs and schools, Kunst says. What we can do now is dig into the credentials of people when we hire them, and ask about their personal involvement in the issues they will be working on. Or we could select people based on what they did outside of school, so basically select them on topics they are already breathing 24/7 in their personal lives. And what we should change — although there is no immediate solution for that now — is to make civil servants accountable for their actions, to create that change in mentality.
Central role
In the northern part of the Netherlands, the municipalities are really looking to the province to take the lead, Kunst concludes. So we often try to find a municipality that is willing to work with us on a specific issue and launch a pilot. Then we use that to show the other municipalities how much money can be saved and what problems can be solved. So we have to prove it first, and even then only a few municipalities will actually join the initiative.
In a rural area like this, the province plays a central role to get things moving. That is so different from the Randstad region, where a city like Rotterdam takes the initiative and sometimes does not even have to involve the province. Every government organisation should be aware of its own specific playing field and act accordingly. But that means swallowing your pride and getting to work, and sometimes that is kind of hard for politicians and civil servants.