Interview with Mikael Edelstam: Local innovation ecosystems driving smart cities

  • knowledge society

We asked Mikael Edelstam, consultant and expert in the European Innovation Partnership on Smart Cities and Communities (EIP SCC) action cluster on business models, financing and procurement, a few questions about local innovation ecosystems.

As part of his involvement in the action cluster, Mikael Edelstam has authored a new report on local innovation ecosystems.

Here we ask him a few questions about what local innovation ecosystems are, how they work, and what they mean for smart cities. 

What is a local innovation ecosystem?

The definition of a local innovation ecosystem needs to be broad and flexible, to reflect the complexity of smart city issues. You can define a local innovation ecosystem according to different levels of hierarchy, thematic areas, and various levels of inclusivity.

Firstly, a local innovation ecosystem comprises a diverse range of stakeholders, including the public sector, business sector, universities, citizens and civil society organisations (the ‘penta-helix’ structure). These can be both organisations and individuals. It also includes existing networks and brings together the competences and capabilities of its stakeholders and networks.

Then there are institutions, policies and practices; commercial, political, research, administration and civil sector ‘markets’; and physical assets, such as incubators, labs, test and demonstration sites.

Certain aspects of the local innovation ecosystem are sometimes overlooked, such as relations within and outside the local context, with stakeholders, competences and markets, and the ideas and perceptions that constitute the mindset among stakeholders about what to do and how to do it. This aspect is important for understanding what kinds of ideas might emerge, and what collaborations will develop.

Why is the local innovation ecosystem important for (smart) cities?

Local innovation ecosystems are important because it is all these stakeholders, ideas and assets that can together contribute to solving the challenges cities face today, with limited resources yet increasing expectations from citizens about services, neighbourhood attractiveness, inclusivity and openness, and the need for major investment in the transition to sustainability.

To be able to bring together all stakeholders and resources in the local innovation ecosystem, the city first needs to understand who and what they are, and then connect and engage with them, finding new and innovative ways to co-create innovations and solutions.

Doing this effectively must build both on research and practice, so with my report I am trying to bring these two aspects together.

Which challenges do cities face when collaborating with other stakeholders?

Cities have traditionally had a tendency to work in silos and be averse to risks. Engaging more with external partners, and with innovation, requires new ways of working and involves some risk acceptance, openness to new perspectives and willingness to open up to initiatives and knowledge beyond the city administration. This might sound easy, but in reality it’s quite hard.

In this report, I outline some of the examples of how cities are getting it right, and offer practical tips on how to go about the challenges and realities cities might face when trying to transform with the help of partners. It’s about developing both organisational issues and mindsets.

How is your report in line with the objectives of the European Innovation Partnership on Smart Cities and Communities and the business models action cluster?

This report outlines useful concepts and practical considerations that cities can use when analysing and engaging their own local innovation ecosystems. Regardless of the thematic issues you focus on, the contents of this report should be helpful.

Many cities already work with some or a number of the concepts and ideas presented in the report, but they still need to structure their work further, increase collaboration between different stakeholders, and learn from international frontrunners.

The report has close links with the work of the action cluster on business models, financing and procurement. Collaboration is essential for any smart city, and genuine collaboration is needed to develop the partnerships, business models and investment models to finance the required initiatives. This in turn is key for scaling up and spreading the innovative ways of working and smart city solutions, so the sections in the report on this could be helpful.

As I mention above, the transition to smarter cities requires a new way of thinking and presents challenges for both municipal authorities and private investors. The action cluster aims to help cities address and overcome these challenges, while my report presents ideas on how best to navigate some of the obstacles that will arise as a result of these new forms of collaboration and interaction between a variety of stakeholders.

At the end of the report, I also outline some of the challenges ahead for the wider EIP community, with the aim of stimulating a discussion on how we can improve the innovation capacity of the EIP as a while by collaborating internationally and learning through all of our experiences.


EUROCITIES leads the EIP SCC action cluster on business models, financing and procurement

EUROCITIES took the lead of the EIP SCC action cluster on business models, financing and procurement on 1 March. The transition to smarter cities hinges on cities’ capacity to transform themselves, work with new business models and access financial resources. The action cluster brings together all of these ambitions and tasks under a single umbrella, with the aim of helping cities learn about and create new integrated business models through innovation local partnerships and to promote the emergence of a European market for innovation which will in turn prompt investment.

EUROCITIES is using its network and experience as a platform for cities and external organisations to exchange experiences on new business models, financing opportunities and different aspects of public procurement. Our ultimate goal for the action cluster is to ensure that the smart city agenda is driven by the needs of cities.


You can find Mikael Edelstam's report here. For more information, please contact him at:

EUROCITIES staff contact

Anja Katalin De Cunto