How Amsterdam Can Seize Global Digital Leadership
October 3, 2017
Digital technologies develop at an ever-increasing pace; innovations rapidly overtake each other. There are more opportunities to shape the future than ever before, and Amsterdam aims to seize digital leadership at a global level. Accenture and VNO-NCW examined what is needed for reaching this goal.
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The digital revolution offers unprecedented opportunities for social and economic growth. Mobile technology, big data, analytics and the cloud have already been integrated into our daily life. Artificial intelligence is also on the rise and promises to radically change our future. These ongoing changes inherently result in great turmoil. Digital is disruptive.
To take advantage of digitalization, a broader vision is required. The Amsterdam metropolitan area is determined to play a pivotal part in that and become a global leader in data-driven innovation. This has been embedded in challenging targets : by 2025, 2,000 new data companies will have to be located in Amsterdam, generating 20,000 new IT jobs and €900 million in additional revenue. Similarly, the average internet connection speed in the metropolitan region will have to rise by 300%.
Amsterdam is in an excellent position to accomplish digital leadership: the region has a great reputation as a residential and commercial city, offers a favorable business environment and has a strong infrastructure. But there are challenges. Companies suffer from the lack of digital talent and face barriers when scaling up new initiatives. If the municipality manages to remove these obstacles, the road to global digital leadership is open.
The digital era is not only defined by the constant flood of opportunities, yet also by the great speed at which we can realize these. However, this acceleration also has an important downside: demand for digital talent grows considerably faster than the offer.
In 2016, over 4,100 students graduated at the universities of applied sciences (MBO) and research universities (WO) levels in studies that match the demand for digital talent; a rise of only 100 graduates compared with the previous year. However, 12,000 IT vacancies remained unfilled in the first quarter of 2016. In the same quarter in 2017, that number even rose to 13,000 unfilled vacancies. The forecast is that this disparity will only further increase as more companies will take on digitalization.
Besides the overall shortage of skilled digital talent, the general digital skill level of Dutch employees needs to be raised. A mere 55% of employees have digital skills above the basic skill level. Therefore, two important challenges are pending in terms of educating digital talent.
The limited rise in new digital talent and the low level of digital skills among employees have a slackening effect on digital innovation growth in the Netherlands. The Amsterdam metropolitan region suffers from these effects like no other region, as 19% of domestic economic activity is offered there. Much time and funding are therefore spent on training and additional education, the search for scarce talent and the delay resulting from lacking knowledge.
A long-term solution is vital, and education is the focal point for this approach. Digital awareness should already be stimulated at an early stage, and digital skills will have to become a central thread throughout the educational system, from elementary school to high school and up to all types of vocational education. Amsterdam will have to step up its efforts in this era in case it’s truly committed to setting up an integral talent agenda.
Cultivating digital talent in the long term will help to meet future demand, but that will not satisfy the present hunger for fresh talent in the short term. Two solutions have been put forth: retraining current employees and recruiting foreign talent.
In terms of retraining, Amsterdam can partner up with academic institutions and support business associations. Though large multinational companies are generally able to structure their own training programs, SMEs often struggle to meet these challenges. The municipality and academic institutions can, however, offer external training opportunities to also facilitate SMEs’ growth.
When focusing on the recruitment of foreign talent, it is key to streamline the processes. More than 100,000 highly skilled migrants arrive in the Netherlands each year, but the highly skilled immigrant scheme is for many companies unnecessarily complex and time-consuming. A one-time approval procedure would aid companies and speed up the recruitment process.
The Amsterdam region is home to a highly diverse range of innovative pilots. Many of these have already lead to partnerships between start-ups, established companies, local authorities, inhabitants and academic institutions.
As only a handful of these innovative digital solutions are being rolled out on a large scale, the true value of digitalization, therefore, lies in new business models and business cases. By applying and standardizing the lessons learned, new ideas can already take off with a head start. For Amsterdam to take up an international digital leadership position, it has to enable the scale-up of digital innovations in every way possible.
Setting up new ecosystems is a significant step in scaling up real-world innovation. Living Labs can offer a strong starting point. This ecosystem uses urban challenges as a guideline and brings together companies to resolve issues with scalable concepts in renewable energy, quality of life and urban mobility.
The city’s role is to facilitate and standardize. An ecosystem should stimulate trust and transparency. Data should be shared and analyzed within a secure environment, ensuring that new insights can emerge. For this purpose, cybersecurity and data governance are indispensable, and that opens up great opportunities for the municipality.
The application and development of new digital technologies principally fall under the responsibility of businesses. This does not mean, however, that that the metropolitan region cannot play a prominent role in this process. On the contrary: there are great opportunities for Amsterdam to remove barriers and stimulate innovation through shaping policy.
But there is also much potential in facilitating forward-looking collaborations between corporates and the academic world, particularly in a community with many prominent educational institutions like Amsterdam.
By translating scientific knowledge into digital business models, we kill two birds with one stone. On the one hand, digital solutions can be scaled up at a faster pace by applying academic insights. On the other hand, students will get the opportunity to apply their skills to real-life, concrete questions from corporates.
The metropolitan area can further strengthen its digital leadership by focusing on other areas. Making data available through Amsterdam Open Data, streamlining the permitting process and applying pragmatic economic policies and legislation offers great prospects. But participating in novel digital initiatives as a launching customer will also stimulate upscaling these projects.
To fulfill its digital leadership opportunities to the fullest, the municipality of Amsterdam will have to make visionary choices and closely collaborate with the corporate and academic worlds in the coming years. The report To a digital quantum leap, co-created with Dutch employers’ organization VNO-NCW, does not only portray the challenges linked to this opportunity but also offers practical recommendations. We have condensed these into seven essential takeaways:
1. Think beyond the country’s borders
Amsterdam is the digital gateway to Europe. This automatically puts digitalization into a global perspective: great solutions created here can be rolled out to the rest of the world in a heartbeat.
2. Develop a strong digital first image
First impressions are crucial. That’s why it’s crucial that Amsterdam strongly invests in positioning itself as a front-runner in digital leadership. Ideally, the region should be bracketed with the concept digitalization.
3. Focus on social value
Quality of life and renewable energy not only fit well within the current zeitgeist – they are truly top of mind among the public. Digitalization also offers many opportunities for social innovation, and such initiatives will only strengthen Amsterdam’s digital leadership profile.
4. Expand the digital infrastructure
A leadership position in digital innovation requires a cutting-edge infrastructure. In this area, Amsterdam already has a big lead. That is why it’s now a matter of expanding this lead as much as possible, in close collaboration with the business community.
5. Let thousands of business models flourish
Digital innovation is an extraordinary dynamic process. The fewer barriers there are, the more it can flourish. Flexibly applying laws and regulations offers more maneuverability for experimental business models and lifts barriers before they have been created.
6. Embrace human needs
The increasing digitalization evolves around one central theme: people. Human-centered design is the basis of most current successful projects for a reason. The message to companies is clear – always start with a user-centered approach.
7. Put digitalization on the agenda
To take the right steps, you will first have to understand which path you are going to follow. Digitalization is and continues to be a process. It is a matter for businesses to have the process assume a prominent place on the agenda. Only then you will know you are moving in the right direction.
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Download the report: digital-transformation