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Colorful, creative, and surrounded by nature, Reykjavik captures Iceland’s spirit. In late 2024, Reykjavik City Councilor Alexandra Briem walked on stage and received the Seoul Smart City Prize for the city’s impressive work in building and deploying the Better City for Children project. Out of 220 applications received from 54 countries, the city won the gold medal for a digital transformation that has enabled improved services for children, youth and their families in school and leisure activities. Achieving this notable milestone was more than just the recognition of one successful city project. The prize was a reflection of a city that had made a conscious decision to prioritize digital government efforts and become a leader in urban technology. There’s much to be learned by their journey and it began just a few years ago. Capital Of The Land Of Fire And Ice Iceland is a small, economically prosperous island country in the Atlantic Ocean, northwest of the British Isles, and south of the arctic circle. It has stunning terrain consisting of active volcanoes, glaciers, and waterfalls. The population is just over 400,000 people, of which 140,000 live in the capital, Reykjavik. The broader capital region numbers around 250,000, which constitutes approximately 64% of the country. While the country suffered significant economic challenges during the great recession of 2008, it bounced back in 2010 through a surge in tourism. Today, the aluminum, fishery, energy and tourism industries contribute significantly to its economy. The country sustains a high-quality of life for its citizens boasting the fifth highest nominal GDP per capita in the world. MORE FOR YOU Reykjavík, the capital of Iceland. Reykjavik, its colorful and lively capital, and one of 62 municipalities in the country, is situated on the southwest of the island. The city is governed by a four-year-term City Council who typically appoint one of its members as the Mayor and are directly elected by its citizens. The capital hosts many local and international companies and has a large banking sector. The Decision To Embrace A Digital Transformation Like most urban areas over the past decade or so, city leadership has felt the need and community pressure to deliver higher-quality services and to embrace digital solutions. But unlike so many city technology strategies that have disappointed and delivered below expectations, Reykjavik has excelled and may be a model for how to execute a digital transformation that gets results. The responsibility for driving the city’s digital transformation and innovation agenda is Óskar Sandholt, who joined the agency in 2012, and now runs the 170-person in-house Department of Service and Innovation. They also collaborate with outside providers and up to 75 percent of his investment budget is used on these external resources. The department’s mission is to design and manage efficient internal and external services, deploy digital solutions, and be an advocate for innovation across all city operations. Óskar Jörgen Sandholt, Director of the Department of Service and Innovation at the City of Reykjavik. Óskar Jörgen Sandholt According to Sandholt, the city became serious about investing in digital transformation as recently as 2019, but despite their late start they’ve made rapid progress, and their newfound focus clearly shows in a list of recent successes. Only technologies that have a clear, undeniable benefit for people move forward. In other words, Sandholt and his team have deliberately avoided some of the rapid momentum towards smart and emerging technologies that other cities have been quicker to embrace without sufficient clarity in their long-term advantages. Sandholt has made stabilization and continuous improvement a top priority so that existing and future systems run efficiently and smoothly. Older systems and processes, not unexpectedly given the historically piecemeal approach to technology by local governments, were complex and performed poorly. Unifying And Scaling The Digital Experience The department is also helping to lead an effort to achieve agreement to synchronize the digital experiences of Reykjavik with the other 61 municipalities across the country. As a matter of principle, Sandholt and many in national leadership believe all Icelanders deserve to have the same digital experience no matter where they live on the island. It’s not a top-down approach and collaboration is being emphasized. This vision is not a done deal and much negotiation and agreement is still ahead. Still, Sandholt remains optimistic with their progress. The way he sees it, a citizen shouldn’t care who provides a service and the digital experience should be consistent from wherever it is requested. There’s obvious cost savings with this approach too, as services can be built once and scaled across the country avoiding the curse of duplication experienced in so many communities around the world. A Key To Reykjavik’s Successful Digital Transformation Why has the City of Reykjavik succeeded in their digital transformation efforts where so many cities have struggled? According to Sandholt, a fundamental shift that enabled their journey was the implementation of centralized investment. Before, departments and individuals could decide how their budgets spent money on technology. It’s far too typical in local government and it naturally results in no unified strategy, duplication of efforts and systems, and a complex, almost unmanageable technology architecture. Now, all technology investments are centralized and aligned with city goals. It was a simple change, but profoundly impactful. The Role Of Artificial Intelligence In Reykjavik Sandholt is bullish on AI and in the short term he sees it as an extension of the automation efforts they’re already committed to, but like their overall approach to emerging technologies, they are taking a slightly more conservative approach, at least for now. Developing complex AI solutions will happen as they build confidence and manage risks through some early, modest projects. For example, they recently deployed an AI solution that handles the thousands of emails they receive each year from realtors. Instead of having a person read the emails, correspond back and forth with the requestor and get them an answer—something that historically took around two days, AI now takes care of most requests in about 10 seconds. Iceland, the land of fire and ice, and full of spectacular waterfalls. While other cities that have embraced generative AI chatbots on their public-facing website, Sandholt’s team has taken a more modest approach. Visitors to the site can choose to talk with a person or use “web assistance” as they call it. Why the reluctance? Given Sandholt’s priority of high-quality customer service means that a bad chatbot could result in the worst service. To him that’s unacceptable. He also believes people should have a choice and be able to switch easily between a person or AI. As the technology inevitably improves, he expects his confidence in AI to also evolve. Digital Transformation Advice For Leaders There’s a lot of learn from Sandholt’s approach: centralize investment, focus on developing a stable and reliable architecture, don’t move too fast with new, shiny technology, and keep quality of service as the top priority. Perhaps his most important guiding belief is in the human aspect of the work. Sandholt is a strong advocate for making the strategic focus be all about people. He loves technology and acknowledges its importance, but he says none of it matters if people aren’t at the forefront of decisions, both the provider and the recipient. For the city team at Reykjavik, people count and continuing to support a future that is human-centric is a priority. That’s a comforting philosophy in a future where so much is uncertain. Editorial StandardsReprints & Permissions
