Growth Of Unicorn Startups in The Baltic States Can Change How the Government Works

  • 2022-07-07

10 years ago, few have imagined how today’s startup ecosystem will look in the Baltics. From very limited number of startups back in the day, to all three Baltic states together having thirteen unicorns, startups worth over 1 Bn euros or more, with over 5000 of smaller startups in the ecosystem. This is one of the highest concentrations in the world per capita.  

While startups are changing the economy of the Baltic states, the nature of their organisations can help transform not just other businesses but also the government. Although known globally as the digital government leaders, all three Baltic states are just starting to cooperate with startups in this space, with GovTech Lab in Lithuania leading the way. In general, unicorn startups have mastered the art of using technology to solve common challenges and then scale their innovations globally. Startup founders are often looked upon as an example of strategic thinkers, able to notice the market inefficiencies and create out of the box solutions to solve them. One sector that has historically been full of inefficient processes, legacy systems and old-school technology is the government. Although Silicon Valley motto to ‘move fast and break things’ might not be the most appropriate lesson for the government, there are still many learnings that could be taken on from the startup world.

Recently, the GovTech Baltic Leaders conference in Vilnius hosted conversations with representatives from two unicorn startups – Povilas Poderskis, COO at Nord Security, former CEO of Vilnius City Municipality Administration, and Martin Ott, CEO of Taxfix. Both conversations were moderated by Greta Monstavice, the Co-founder and CEO of Katalista Ventures. They shared their thoughts about what can governments learn from companies like them.

Citizen – at the centre of the service

Startups build products around their users, not based on their internal processes. The user-centricity, simplicity and intuitiveness are often their competitive advantages over legacy market players. However, digital public services often have more similarities with old corporates than startups. Exchanging complex bureaucratic messages to simple language, differentiating and personalising experiences for different people (e.g., different processes for a student or a senior), ensuring that various forms are pre-filled as much as possible – these are the major lessons government can (and in some cases, already is) take from the startup world.

Culture of iteration and testing

Startups are often the best examples of agility. Only through continuous testing, feedback, and iteration they can build products that truly suit the global needs. They can quickly find what works, pivot toward better solutions and ditch unsuitable features or products. Of course, governments and businesses are inherently different in this space – if a public service does not seem to attract much interest, the government cannot just decide to pivot to another service as they are often bound by law to provide it anyway. Additionally, the space for iteration should be chosen carefully – iterations and testing should be done with limited disruption to live systems. However, having continuous feedback loops, and analysing drop-off points during the service must become part of the day-to-day agenda for the digital public service employees. 

More cross-functionality 

Unicorn startups are often nimble enough to build cross-functional teams by design. This ensures that challenges across the organisation are shared while skills, perspectives and knowledge are not siloed among the departments. Often building innovative products without cross-functional teams is impossible. Breaking down these siloes is one of the key takeaways for the public sector. For wicked challenges, such as climate or demographic change, the same cross-functional abilities are essential to finding out of the box solutions. 

Taking care of your talent 

Talent is at the core of creating the best products and services. However, there is a global shortage and competition for digital talents. Unicorn startups have already understood that and try to compete by providing higher salaries, a creative working environment and other perks. The appreciation and importance of talent must be taken on by the public sector organisation as well. Although often unable to offer similarly high salaries, public sector organisations could focus more on selling the impact and purpose of the public service, this way attracting the attention of younger generations for whom social purpose is among the top of the criteria. 

Creating many pathways for outside collaborators

Major tech platforms and social networks have built APIs or other tools to ensure that external developers can connect to their systems, create, and integrate new tools. This can help the platforms themselves grow and evolve as they become part of a bigger network. This is something that public service digital platforms and organisations running them could learn – creating standardised APIs together with easily accessible documentation. This could help startups build exciting new tools on already existing digital services, without putting this burden solely on the public sector.  

Startups and governments are different. Yet the public sector can learn various methods and techniques from startups and apply them to solving public sector challenges. The conversation on this topic happened during the GovTech Baltic Leaders conference, organized by the GovTech Lab Lithuania, project funded from European Regional Development Fund (01.2.1-LVPA-V-842 Inogeb LT). If you want to hear the conversations as well as other discussions on the GovTech topic, you can watch the conference here: