‘Just do it’: digital transformation lessons from Estonia

The small­est of the Baltic states by both area and pop­u­la­tion, Esto­nia has served as a polit­i­cal pawn in the hands of sev­er­al neigh­bour­ing pow­ers over the cen­turies. Since regain­ing its inde­pen­dence after the col­lapse of the Sovi­et Union 30 years ago, this repub­lic has been punch­ing mas­sive­ly above its weight in one respect: tech­no­log­i­cal inno­va­tion.

In 2005, for instance, it was the first coun­try to enable online vot­ing. In 2012, it was the first to use blockchain tech­nol­o­gy for gov­er­nance. By the time that Wired mag­a­zine named Esto­nia the “most advanced dig­i­tal soci­ety in the world” in 2016, almost all pub­lic spaces in the coun­try had been served by free Wi-Fi for a decade. Today, under the government’s so-called e‑Estonia pro­gramme, 99% of gov­ern­ment ser­vices are acces­si­ble online, while 70% of the country’s 1.3 mil­lion cit­i­zens reg­u­lar­ly use dig­i­tal ID cards. 

“We joke that our e‑services are impos­si­ble only for mar­riages and divorces – you still have to leave the house for those,” says the man in charge of e‑Estonia, Siim Sikkut, who has been the government’s CIO since 2017. 

He explains that the coun­try des­per­ate­ly need­ed a tech­no­log­i­cal “reboot” after gain­ing its free­dom from the debil­i­tat­ing grip of Russ­ian rule in 1991. With this in mind, the state com­mit­ted itself to elec­tron­ic gov­er­nance – a deci­sion that estab­lished a dig­i­tal-first approach on which the country’s pio­neer­ing inno­va­tions have been based ever since. 

Sikkut, who also chairs the nation­al task force on arti­fi­cial intel­li­gence, grad­u­at­ed from Prince­ton Uni­ver­si­ty with a degree in pub­lic and inter­na­tion­al affairs in the same year that online vot­ing start­ed. He ini­tial­ly joined the Min­istry of Finance before becom­ing a dig­i­tal pol­i­cy advis­er at the Min­istry of Eco­nom­ic Affairs and Com­mu­ni­ca­tions, when he co-found­ed Estonia’s ground-break­ing e‑residency scheme. Among oth­er things, this offers entre­pre­neurs based any­where in the world a dig­i­tal ID grant­i­ng them and their busi­ness­es remote access to mar­kets in the EU.

Spearheading the world’s digital revolution

Sikkut, 38, is mod­est about the role he has played in cre­at­ing what the e‑Estonia web­site calls “an effi­cient, secure and trans­par­ent ecosys­tem”.

“I stand on many shoul­ders,” he says. “When I moved to my cur­rent role, it wasn’t a ques­tion of what to digi­tise next. All the low-hang­ing fruit had been picked. It has been about how to keep going to the next lev­el of digi­ti­sa­tion. We need to keep every­thing run­ning while inno­vat­ing and iter­at­ing.”

What might have been classed as a risky com­mit­ment to tech­nol­o­gy three decades ago has fos­tered a more pro­gres­sive and open soci­ety, both online and offline, accord­ing to Sikkut. A Euro­barom­e­ter sur­vey in 2018 found that 49% of Esto­ni­ans trust­ed their gov­ern­ment, com­pared with the EU-wide aver­age of 34%, for instance. 

Indeed, it is said that in Esto­nia you are only two calls away from the prime min­is­ter – the impli­ca­tion being that peo­ple in this small coun­try are com­mu­ni­ty spir­it­ed and will­ing to help each oth­er out.

Size matters: but trust trumps all

“It does help that there are few degrees of sep­a­ra­tion here,” Sikkut says. “With our small pop­u­la­tion, we get things done – both the con­nec­tion and deci­sion cycles are much short­er here than in oth­er coun­tries. But our tal­ent pool is much small­er too, so our size is both a con­straint and an oppor­tu­ni­ty.”

It’s no coin­ci­dence that the cap­i­tal, Tallinn – where Sikkut lives with his wife and their three young chil­dren – is often referred to as Europe’s Sil­i­con Val­ley. Esto­nia is esti­mat­ed to have pro­duced more start-ups per capi­ta than any oth­er Euro­pean coun­try in recent years. Accord­ing to Start­up Estonia’s online data­base, 1,104 enter­pris­es have been estab­lished in the coun­try since 2013 – includ­ing Uber rival Bolt and pay­ment com­pa­ny Wise (Trans­fer­Wise until it was renamed at the start of this year).

Any entre­pre­neur seek­ing to up the pace of their business’s dig­i­tal trans­for­ma­tion has much to learn from Estonia’s expe­ri­ence. Sikkut believes that strate­gic part­ner­ships are key in this respect. He points to e‑Estonia’s soon-to-be-launched digi­tal test­bed frame­work, a col­lab­o­ra­tion mod­el that will offer free access to the government’s tech stack, on which any busi­ness world­wide can build new prod­ucts or ser­vices and gain proofs of con­cept.

“I’d say to busi­ness lead­ers: ‘You have to be open for inno­va­tion and open to part­ner­ship,’ like we’re try­ing to be with our test­bed frame­work. If some­one comes to you with a good idea, take it on board, try it out and then per­haps you can move more quick­ly,” he says. “We’re look­ing to increase the speed of inno­va­tion in Esto­nia again by being open and encour­ag­ing exper­i­men­ta­tion with new ideas. The emer­gence of AI has been a game-chang­er, for instance, as we embark on this new stage of digi­ti­sa­tion.”

Taking people with you

What oth­er advice would Sikkut offer busi­ness lead­ers look­ing to intro­duce new dig­i­tal tools and ser­vices? 

“If you build some­thing that saves peo­ple time, mon­ey or effort and offers them val­ue, they are like­ly to use it and refer it to oth­ers,” he says, adding that “you still might want to throw in incen­tives for peo­ple to start using them. For exam­ple, we offer much quick­er tax reim­burse­ments to those who com­plete their forms online rather than on paper.”

Sikkut stress­es that it’s essen­tial to spend an ade­quate amount on train­ing peo­ple in how to use new dig­i­tal tools. “We’ve invest­ed in infra­struc­ture and worked on skills to ensure that peo­ple can use our online ser­vices. You have to take care of your users so that you can bring them along with you,” he says.

His advice for any entre­pre­neur who may be approach­ing dig­i­tal trans­for­ma­tion with trep­i­da­tion is to learn from his country’s suc­cess and stop dither­ing. 

“Just do it,” Sikkut says. “You’ll nev­er have a per­fect plan. Take an engineer’s atti­tude: try things out, fix them if they fail and try them again before scal­ing up your oper­a­tions. I hope that our expe­ri­ence in Esto­nia shows that it’s not rock­et sci­ence. With com­mit­ment, any­one can achieve a dig­i­tal trans­for­ma­tion. You don’t have to build every­thing from scratch. There are solu­tions that you can reuse and you can part­ner with peo­ple who’ve gone through it already – includ­ing us here in Esto­nia.” 

He con­tin­ues: “The lat­est tech­nol­o­gy will prob­a­bly not solve all your prob­lems. What mat­ters most is being open to pos­si­bil­i­ties and open to part­ner­ships. If you give bright peo­ple a con­ducive envi­ron­ment, mag­ic will hap­pen.”