Better Funding - Action 13: Co-creating a business model approach for cities

  • Cristina (Commu... profile
    Cristina (Commu...
    5 February 2018 - updated 6 months ago
    Total votes: 1


Urban digital transition involves addressing the creation, selection and transformation as well as continuous provisioning and utilisation of digital services for citizens and other stakeholders with appropriate – scalable, adaptable and sustainable – business models. Originally, the business model was developed as a tool to design, visualise and communicate novel digital business and service concepts in an efficient manner and direct strategy implementation. However, business model thinking is not widely adopted by the cities as a strategic tool for development nor governance. Business models are not only meant for private commercial organizations, but they are equally important for cities to exploit the opportunities of digital transition. Cities need the business model approach in the governance and decision-making of their future digital services especially regarding three key questions (Figure 6):

  • How to identify opportunities for digitalization?
  • How to create and capture value from digital solutions?
  • How to build competitive advantages for sustainable innovation and business policies?

Business models help to answer the questions what cities are offering to their customers in terms of products/services and value proposition, how and where they are planning to do that in practice, and why do they think they can do it in a sustainable way (Figure below).


City business model


For cities the business model could be a way to perceive, design and execute actions regarding their digital services. New services are often selected from a variety of earlier developed alternatives or co-created with companies, researchers and citizens. In doing this, questions such as how to carry out the selection/creation, experimentation and validation of the new services and respective business models may arise. In addition, the development contexts for new services and their respective business models may vary from Living labs to Incubators, Think tanks, NGOs, Universities, Companies and Cities themselves. In these kind of contexts, existing off-the shelf products and services fuse with city-generated or user-generated content. These highlight the differences in city and company business models, functioning and cultures.  These differences result in in challenges around ownership, control and accessibility issues, balancing the competitive and collaborative tensions between stakeholders, prioritisation of users and usage of various data, or dependency on a single supplier.

Although smart city initiatives often seek to address urban context such as open innovation platforms, knowledge in practice is still largely in silos, and vertical structures dominate in the public sector. Digital transition challenges existing city services, processes, structures, policies and regulations. Therefore, we see that cities themselves need to understand why and how to utilise business model approach and what kind of business models could help them guide digital transition. Hence, business models can be considered as an umbrella approach to digital transition for fostering better use and spread of knowledge that emerges in the city context, across different vertical and horizontal domains, and for accelerating urban growth by breaking the silos.


In digital transition, the cities themselves need to build and take on board an appropriate business model approach where learning from experience and co-creation plays crucial role. This learning and co-creation would best take place between peers; cities with similar enough challenges and objectives for digital transition so that to facilitate collaborative learning. However, the peers should also represent enough variation in their profiles, regulative domains, and levels of digitalization to ensure efficient and fruitful adoption of appropriate business model approach. Specifically, we propose co-creating the approach that helps to produce tailored city-specific business models for facilitating the cities’ selecting/creating, experimenting, validating and provisioning of digital city services. Therefore, this action complements the EU level initiatives that aim to disseminate business model thinking such as EIP-SCC Business Model Action Cluster, Public Procurement Partnership in the Urban Agenda, and numerous Lighthouse projects (e.g., REPLICATE or REMOURBAN) aiming at developing replicating smart city business models of individual digitalized services. 

Objective of the action: Developing the business approach and city tools for digital transition that acknowledges the scalability, sustainability, replicability and adaptability of citizen-centric and inclusive digital services.

Level of governance: Local


  • A business model tool and approach that cities can apply in digital transition.
  • Exploration and co-creation of new ideas and concepts, demand-driven solutions, and new digital services to be made available for the citizens and other stakeholders through digitalisation.
  • Exploitation and commercialisation of prototypes or pilots of currently used digital city processes and services.
  • A framework and criteria for cities to assess, develop and select existing or currently available digital solutions.


  • To co-create a business model approach for cities, the relevant stakeholders are selected utilising the quadruple helix thinking (comprising government/public, industry, academia and citizens), keeping the inter-city collaborations as the core of action.
  • Development of the business model approach will be developed as expert work, and piloted and implemented in collaboration with relevant the city networks.
  • Dissemination of the outcomes could take place through existing networks, platforms and public initiatives.


  • Preparation: 2018 involving and identifying stakeholders/partners.
  • Implementation: 2018 – 2019 initiating city activities.
  • Assessment: 2019 assessment of impact and outcomes.

Action leader: Eindhoven and Oulu.


Helsingborg, Eindhoven, Lyon, Sofia, EUROCITIES and URBACT.

We are looking for smaller cities who are looking to co-create with us. To support our action, we need:

  • Funding for preparations, facilitation and support of the process, and actual co-creation participating cities.
  • Involvement and commitment of the key decision-makers in the cities to root the developed business model approach to the cities.
  • Network for disseminating the business model approach the city-specific examples


See also: