Innovation summary
Blockchain technology has become increasingly popular over the past few years at the international level, both in the public or private sector. In an attempt to promote digital development, the Dutch government has established the Digital Public Sector agenda, which outlines the targeted innovations, as well as matters related to the protection of basic rights and public values. At the local level, authorities are experimenting with the potential of blockchain technology, among other things. The Zuidhorn municipality (currently known as Westerkwartier municipality) in the northern part of the Netherlands was one of the country’s first municipalities to develop an integrated application based on the principles of blockchain.
Alderman Stol, a member of the municipality, had prioritized bridging the gap between dignitaries and ‘regular people.’ His responsibilities included the stimulation of the “knowledge economy” in the Zuidhorn municipality (19,000 inhabitants). Given that the municipality is located at a short distance from the University of Groningen, Hanze University of Applied Sciences, and other knowledge institutions, it was determined to take advantage of this proximity to adopt a knowledge-based economy. When forming the municipal executive, the nominated members were requested to clarify how they would address the obstacles they may face. Would they refer to the rules and procedures or accept mistakes that may occur when implementing new initiatives, given that they are a part of the process? The parties concerned with sustainability (GroenLinks, left-wing political party), as well as monitoring and supervision (the ChristenUnie and centrist political parties) shared the same ambition of shifting into an economy based on knowledge and innovation in the municipality to serve the residents, as well as their children and grandchildren. The basic principle was to encourage everyone to embark on a journey or adventure, explore every potential field and seize every opportunity without worrying about the rules.
The municipality’s activities adopted one essential motto: “Our aim is to make Zuidhorn a little bit more beautiful every day.” To achieve this, the municipality has adopted a more open perspective and launched an internal rewards initiative. Under these conditions which coincided with the launch of the innovation, department head Erwin van der Maesen de Sombreff attended a conference one day during which he was introduced to blockchain and was inspired by this technology. He believed that blockchain would make it possible to verify the identity of applicants for services or products by using a software-based solution rather than having employees review each application. He decided to recruit an intern, Maarten Velthuijs, with whom he signed an internship agreement. When the project kick-started, Maarten clarified that he was not interested in a mere thesis, but wanted to implement an integrated functional concept. “If I really want to make a difference in our ways of working, I will simply have to accept this idea,” Erwin said to himself.
According to Maarten, blockchain can be used to extract personal data from databases and return it to its owners. This technology can store personal data in the network in an encrypted form while disclosing the encryption key to the owner of this data alone. In this manner, the data is not owned by Google or any other commercial entity, not even the government itself. The user is the only party capable of choosing the entities which can access the data. It is actually the start of a new form of internet, but users are the ones in control, instead of commercial businesses. Maarten formed an international team that came up with the idea of using the standard roles of the applicant, donor, provider, and validator in all public service applications.
The Child Package is aimed at helping children living in low-income households. At the time, the local authority incurred a significant cost to implement the project, as it offered vouchers for beneficiaries to purchase products from certain shops. Applicants had to pick up those vouchers at a certain date set by the local authority. After four months of hard work involving close cooperation with local employees, the program’s procedures were amended to adopt the new technology. The Child Package no longer involves cash transactions alone, as citizens can access the website using a specific activation code or a QR code to pay for children’s products from the participating regional shops.
Innovation description
What makes your project innovative?
The Zuidhorn local authority was one of the first users of an application based on blockchain principles, which significantly enhanced the way citizens received childcare benefits. The technology allows applicants to obtain the products directly by logging in to a specialized website and choosing the products included in the program. This is considered an easier approach compared to printed vouchers and prevents citizens from using the money for purposes that do not serve their children.
In the Netherlands, Zuidhorn municipality is considered a pioneer in innovative solutions. The achieved results were praised and applauded by many entities. Moreover, the municipality won many innovation awards.
What is the current status of your innovation?
In November 2017, the Child Package was launched and residents and businesses both welcomed this innovation. Citizens liked the idea of being unable to spend the money on other things, such as groceries, and having no other choice but to spend the money on their children’s needs. The local authority is currently using the results of this pilot to enhance the application.
Following the merger of local authorities on January 1, 2019, Zuidhorn municipality became part of the larger Westerkwartier municipality. Preparations are underway to roll out the Child Package on a larger scale in all of Westerkwartier municipality. With the creation of the innovation and research team, innovation is now a key pillar of the new municipality.
Participating Entities
The innovation was led by the department head of the Zuidhorn municipality, while an international team of experts developed the application, in close collaboration with local employees and the local community (entrepreneurs). On January 1, 2018, the Association of Netherlands Municipalities supported the project in the form of a so-called “pilot starter,” providing opportunities for beneficial communication with other municipalities.
Users, stakeholders, and beneficiaries
Low-income households leveraging childcare benefits are the main users of the Child Package application. The Child Package no longer involves cash transactions, as users can access a website using a specific activation code or a QR code to pay for children’s products from the participating regional shops.
Results and impacts
The Zuidhorn local authority currently has an efficient application based on the principles of blockchain, which can be further expanded because it is based on a technology that has what it takes to be used in the entire public sector. Zuidhorn municipality has positioned itself on the innovation map internationally by winning the digital hackathon. The municipality also collaborated with entrepreneurs in an innovative project and inaugurated a new knowledge institution within the municipality. Most importantly, it contributed to an important public interest by leveraging new and innovative technology and making it accessible to the public. This technology includes an app that can be used anywhere in the world for all procedures that require data verification, such as parking permits, environmental permits, grant applications, and for procedures related to pension or childcare payments. The technology enables applicants to access a specific website and choose the products included in the program.
Challenges and failures
The organizers of the Child Package application believed that working outside their comfort zone was a challenge. They were often nervous and wondered if they were allowed to make mistakes. To be able to innovate, they had to think outside of the box without crossing the limits of the municipal work system. Although the Zuidhorn municipality provided an environment conducive to innovation, some people were skeptical about the use of blockchain. It was sometimes difficult to explain the technical aspects of the application to colleagues who lack technical background.
Conditions for success
By developing the Child Package application, the Zuidhorn municipality sought to meet the needs of the community and politicians by applying new technologies, such as blockchain. The municipality’s innovation-friendly ecosystem contributed to the application’s success. The environment was so informal and anyone was allowed to join a meeting held by the municipal executive and present any innovative idea. Managers not only focus on results but also allow room for experimentation. The Zuidhorn municipality showed a drive for innovation and allocated funds to solicit and implement innovative ideas. The Child Package was not Zuidhorn’s first innovation.
The possibility of replicating the experience
So far, the Zuidhorn local authority has been one of the first authorities in the Netherlands to provide an integrated application based on the principles of blockchain. Other public institutions can easily replicate this innovation, like with social benefit programs. Ultimately, blockchain software is open source, which means that any entity can use it to develop any application. Moreover, the same roles of the sponsor, applicant, validator, and supplier used by the Zuidhorn municipality in the Child Package can also be replicated universally.
The use of blockchain requires a true willingness within the public sector to accept role changes in society. Mutual trust and reaching a consensus is the basic principle for the success of blockchain. In this case, the public sector no longer performs the central regulatory role because the system fulfills it automatically. In countries where the public sector remains mostly responsible for the organizational role, the use of blockchain may be met with some resistance.
Lessons Learned
The Zuidhorn municipal authority has learned that the use of blockchain enhances the services offered to citizens. Blockchain is powerful because it exponentially speeds up administrative processes and reduces burdens to a minimum. The success of Child Package proves that any small local government can take the initiative, develop new technological applications, and become a role model. By undertaking this leading role, public entities can choose the most suitable field to develop these technologies rather than leaving this opportunity to commercial businesses and depending on them to meet their needs. Based on the principle of achieving public value, these entities can shape the internet of the future.
