Case study: Digital disruption in the public transport sector

The public transport sector is facing major changes, driven by actors who have the ability to change dominant design and the mandate to break up entrenched positions to change the system logic for how value propositions are created for travellers. An example of this is the state-owned company Entur, which has caused digital disruption in the Norwegian public transport market by taking on sector responsibility and incremental development of a national multi-sided digital platform. This has enabled the realisation of the political vision to make public transport more attractive and an alternative to car travel. The case depicts how Entur breaks with standard procurement procedures to achieve transport policy objectives by relying on open source technology, as well as by engaging in open innovation processes with actors in the open source community. The study presents seven phenomena that have an impact on the ability of traditional organisations to create digital innovation and radically improve the value proposition.

Table of content

• Introduction
• Method
• Results
• Discussion
  • Categorisation of observed phenomena
• Summary

Introduction

The theorisation of the phenomenon of digital disruption (Skog, Wimelius, and Sandberg 2018), describes it as part of a larger change process, namely digital transformation. The authors present digital disruption as an innovation process with a cause-and-effect relationship that can be traced to the systematic impact of an organisation and its environment. Disruption occurs in a limited time frame and rapidly erodes existing business models and system logic around how value is generated within a market segment. Digital transformation differs from disruption by being the cumulative effect of multiple digital innovations and continuous change of business models (Hanelt et al. 2021). The Mobility-as-a-service (MaaS) study (Karlsson et al. 2020) describes the public transport sector as a traditional industry with rigid structures, public bureaucracy, established relationships, divided responsibilities and fragmented system support. According to the authors, this makes it difficult for new actors to influence and change the overall system logic of how value propositions are created by applying concepts such as Mobility-as-a-service (MaaS).

Digital innovation is based on the possibility of creating sufficient design space to continuously explore and combine physical and digital resources. These can materialise in the form of new innovations and change the system logic of how value is generated (Skog, Wimelius, and Sandberg 2018). This process is self-reinforcing, allowing for increased headroom for each iteration by incrementally building on previous refinement and combining it with new resources not previously refined. Digital innovation is described as possessing three characteristics: (1) programmability – due to the digitisation of resources, (2) homogenisation of data, and that (3) digital technology is self-reinforcing and generative (Yoo, Henfridsson, and Lyytinen 2010). Theorising digital disruption (Skog et al. 2018) presents a conceptual model of the change process in four phases: discovery, development, diffusion and impact. The process starts with exploration and development within the organisation’s structures in the first two phases. It then moves to diffusion and impact, where the innovation and the new value proposition influence the environment in the last two phases. At each stage of the model, the disruptive force may cease, for example due to a lack of competence, insufficient resources to explore how digital technology can enhance existing business resources, strong resistance to change from incumbents, or the new value proposition is not different enough from the existing one.

The phases are used in this study to identified phenomena affect Entur’s opportunities for digital innovation and transformation of the value proposition during the development and implementation of a national digital platform for travel planning and ticketing. The intention is to identify phenomena that can explain how a chain of events, decisions and circumstances can account for the transformative change and digital disruption that has occurred in the Norwegian public transport sector. According to Skog et al (2018, p. 432) digital disruption is described as breaking up existing value chains by reshaping business relationships, structures and the combination of resources in a new way, by creating a more direct interactions and transactions between producers and consumers. The study also aims to investigate how possible characteristics of digital technology and participation in digital ecosystems contribute to improving the value proposition in the public transport sector.

Method

The study applies Yin’s (2017) explanatory research strategy and Eisenhardt’s (1989) case study methodology to describe the chain of events, decisions and circumstances that lead to digital innovation, disruption and transformation. The study uses an abductive approach to analysing qualitative data, which according to Timmermans and Tavory (2012) is suitable for producing new theories and hypotheses from norm-breaking cases by identifying causal relationships between empirical data and grounded theories. According to the authors, abduction has its own logic that differs from induction and deduction in that it allows for a creative process of discovery, logical derivation and categorisation of contextual events and phenomena and their relation to grounded theories. Timmermans and Tavory further argue for the importance of abduction as a complement to grounded theory (Glaser and Strauss 1967) to enable theoretical innovation and hypothesis building through a dyadic approach between grounded theories and evidence from more original case studies.

The rationale for studying Entur is that it deviates from the general public sector procurement process and business transformation. Furthermore, the case differs from the way state-owned enterprises operate by establishing a digital culture, self-developing a national digital platform based on open source and standards, radically changing the value proposition to end users, and engaging in open innovation processes with actors in the digital ecosystem. Entur’s transformation journey describes an unusual approach in the public sector by moving away from conventional procurement procedures of standardised solutions in waterfall-based processes with long lead and delivery times to meet policy objectives.

Data gathering

The primary data source of the case study is based on two in-depth interviews with two persons with the roles of team leader for development and project manager for the National Travel Planning Project (NRP). The interviews were conducted at Entur’s headquarters in Oslo in March 2023, and the total recording time is 2 hours and 33 minutes. The interviews are based on open-ended questions around themes such as operational capabilities, structures and governance related to digital innovation, incremental digital service development, digital technology, open source and standards. Identified phenomena were triangulated with secondary open sources. These include Entur’s website for news and events, Entur’s changelog for service and APIs, Github’s changelog for OpenTripPlanner, OpenTripPlanner official website, European public transport standard NeTex website, Entur’s YouTube presentation of OpenTripPlanner, Statens Vegvesen’s presentation of national travel planning and the national ITS public transport plan.

As part of the triangulation, a published descriptive case study by Rudmark et al (2023) was utilised. The study describes the system architecture, standards, agile project methodology, technology choices and decisions that enabled Entur to develop a unified national digital platform for travel planning and ticketing. The case study is based on data collection over several years with people from Entur, OpenTripPlaner and OpenStreetMap. The detailed data set of the previous study on Entur’s digital platform allowed the interview questions for this study to focus on the unfolding of the transformative journey that Entur has undergone.

Data analysis

The study was analysed using abductive research methodology (Timmermans and Tavory 2012), which is based on recursive inference between phenomena in the data and established theories. The process begins with a preliminary deduction to identify similarities and differences between the collected data and established theories. After the initial analysis, a recursive process of switching between inductive and deductive of established theories and data from the study. In order to formulate new hypotheses and constructs that could explain and link the chain of events, decisions and circumstances in the case study.

Some of the phenomena described in the discussion section are consistent with established theories and constructs. What is missing, however, is the temporal aspect of explaining when and how these theories influence similar events presented in the case. The identified phenomena in the dataset span roughly from 2015 to 2022. To facilitate the understanding of the sequence of events of how different phenomena affected the company and its environment at different stages, they are classified according to a theoretical model with four development phases of digital disruption according to Skog et al. (2018). Other phenomena in the data consist of a combination of high-level theories and concepts, which need to be broken down and studied in more detail to better understand their impact on events similar to those in the study. The analysis concludes by categorising the phenomena into hypotheses and constructs, with associated descriptions of how they influence the chain of events to enable digital innovation and change the value proposition.

Results

Discovery (organisational level)

The ambition of the NRP was to create a digital platform for seamless public transport travel across Norway, which could evolve in line with changes in the mobility sector, travellers’ needs and to achieve the political objectives of making public transport more attractive. The evaluation of standard systems and end-to-end solutions available on the market in the initial phase showed that none of them used the digital technologies considered necessary to create a scalable and cloud-based solution that met the project ambitions. Examples of technologies referred to are asynchronous data flows, scalable cloud technology, microservices architecture, open standards and data formats, etc.

At the time of the evaluation, there were around 75 different travel planning systems in Norway, with public transport companies and train and bus operators having their own customisations, travel apps and user interfaces. Most of the operators used the same end-to-end solution from one system provider, but despite this, it was not possible to harmonise data nationally or offer travellers a uniform national system solution. The end-to-end solution needed to be rebuilt from the ground up, and the system provider wanted Entur to pay for the redesign. The team did not consider this to be cost-effective and it did not benefit Norwegian public transport as it did not have control over the system development process. Additional factor affecting the decision was that the NRP reference group, consisting of several stakeholders in the public transport sector, was not satisfied with the overall end-to-end solution used by many operators.

“We saw a huge gain with open source, because we can then create something that others can contribute to in the same project “. “We made a significant investment at the time and were quite early, but now we are seeing greater returns from the project…”

The process of proposing customisations of end-to-end solutions from system vendors had a lead time of approximately 9 months. Furthermore, in the team’s experience, there was no guarantee that the customisations would be implemented within the timeframe promised by the vendors in previous engagements. In addition to the long lead times, none of the system providers could offer transparency on the internal processes for prioritising system changes. Another problem was that none of the end-to-end solutions supported the open European public transport standards (NetTex and Siri) to enable data and information exchange across regional and national borders. Overall, the end-to-end solutions provided by the system vendors were seen as an obstacle to achieving the objectives of the NRP.

To overcome the barriers identified in the evaluation, the team developed their own prototype based on open technology and agile project methodology. There was a perception in the public transport sector that it was unique and required domain knowledge to develop information systems. The team had a different view, based on experience from other sectors and industries. To implement the prototype, priority was given to recruiting developers with experience of incremental-agile systems development, digital technology and experience of working on open source projects. The project succeeded in attracting experienced developers with an interest in working with open digital technology which created an entrepreneurial and start-up culture. This proved to be an important factor in the rapid development of the prototype and the further development of the platform in later phases. The team, which started with just a few developers, managed to produce a working prototype that met the NRP objectives within 6 months.

The rapid realisation of the prototype would not have been possible without open source solutions that was part of the core functionality of the platform. Three of these were available as open source projects, including the user interface for trip planning. Central to the development of the prototype was OpenTripPlanner (OTP), a complete open source solution for multimodal trip planning, available since 2009, well documented and with a active community. One component had to be developed from scratch and some of the open source solutions had to be customised to create a working whole.

The team took on the role of educating decision makers in the project steering group and the responsible ministry that agile project methodology and participation in open source projects and communities were entirely different from previous paradigms of outsourcing and contractual relationship with fixed project duration, fixed budget and specification. The challenge was to change ingrained routines and mindsets for how procurement was conducted. By conveying the importance of agility, participation in open source projects, influence over system development and the ability to continuously creation of value proposition. It took almost two years before decision-makers started to realise the benefits over previous waterfall-based processes and silo-based development methodology. One factor that contributed to acceptance during the discovery phase was the fact that the team managed to develop a working travel planning prototype within six months.

“The public transport sector is very silo-based, with one group working on timetables, another on ticketing and another on the end-user perspective.” “It was a difficult process to change the mindset of decision makers.” “We were banging our heads against the wall for the first year, trying to build understanding of our goal and stay on track.”

Development (organisational level)

When the development of the platform started, issues emerged that had not been clear or difficult to identify at the outset. One of these challenges was to assess whether an open source project was sustainable or not. Making such an assessment requires a thorough understanding of the codebase to determine its quality, whether it is based on sustainable architectural principles, good project documention and has appropriate processes for decentralised development.

As the team gained experience and insight into the OTP codebase, it became clear that the project was difficult to maintain and would probably die a slow death if nothing was done. A contributing factor to this was that no one in the community had taken overall responsibility for quality assurance of the codebase and several participants had created their own versions that were not compatible with the main version. This made the project difficult to maintain and develop. The reason for this was explained to be that individual enthusiasts who had been involved since the start had difficulty managing, documenting, administering and quality assuring the code base when the project reached a certain size.

“Version 1.0 was dying because of the large number of contributors who had made lots of changes and created their own versions (forks), with no one taking responsibility for merging them into the master version.” “That’s why we took ownership of version 2.0.”

In order to influence the direction and address the shortcomings of the OTP, which has a active community, the team had to spend a considerable amount of time building and gaining their trust. To achieve this, the team also had to demonstrate that they were competent enough to gain maintainer status and become core members of the community. Only after achieving this the team could take active ownership by further improving the codebase, documentation, establishing guidelines and administrative processes to ensure the sustainability of the project. To address the shortcomings in code quality, the team started working on a new version to make it more modular and extensible compared to previous versions. The work lasted almost two years, with two dedicated developers from the team working full time on the new version before the rest of the community started to contribute to the development.

The advantage of being part of a large community like OTP is that it provides access to global expertise that is not available nationally. The team has gained access to experts from Finland, Germany, Hong Kong and the USA who have been contracted to solve specific problems. The team’s commitment and role as a core member of the OTP has created goodwill, leading to several experts to choose to work with Entur over other options. A key reason for this is described as the desire of talented developers to work and contribute to the development of cutting-edge technology. Another benefit of participating in the open source community is knowledge transfer. For example, domain experts can provide solutions that the rest of the community can learn from and use in their development work. In addition, the focus on open source and standards has enabled the team to recruit and scale the team during the development phase with talented developers nationally who want to work with digital technology, interesting challenges and be part of something bigger. This is explained as a contributing factor to the creation of an entrepreneurial and start-up culture and the rapid pace of development in building the prototype at the beginning of the project. In addition to being able to attract experienced systems developers, the NRP has had minimal staff turnover, which is beneficial as it takes up to six months for each developer to familiarise themselves with the code base and become productive.

“If you want the best solutions, you need to attract the best developers. The best developers want exciting challenges, to find the best solutions and to work with cutting-edge technology in active collaboration with others in the open source community. It makes the workday exciting and motivates the best developers.”

Diffusion (ecosystem level)

One benefit of having control over the development process is that the team has automated functional and integration testing, giving them the ability to roll out new features nationally in a matter of hours. During the pandemic, the team was able to use this capability to quickly roll out an alternative travel search feature to avoid congestion at the cost of longer travel times. The team has spent a lot of time automating DevOps processes and continuous delivery, which would not have been possible without control over the codebase and development process. Another benefit of having this control is described as the ability to identify synergies with members of the open source community and actors in the digital ecosystem, such as researchers, developers, companies and organisations. For example, the team was able to coordinate development with researchers from a large technology company and other community members when implementing a journey planning algorithm in the OTP codebase, improving search speed by 5-10 times.

When Entur’s platform began to be used by the Norwegian public transport sector, the team faced opposition from the system vendor that had provided many of the end-to-end solutions previously used by the Norwegian public transport sector. The vendor sent a written complaint to the relevant ministry, claiming that Entur’s development team – largely made up of consultants – was using its position to out-compete Norwegian companies using state resources. From the NRP point of view, the platform was made available as open source for anyone who wanted to use and contribute to the national platform. With the motive that open standards and open source solutions contribute to a better use of resources, synergy opportunities and risk sharing for developing a digital infrastructure for the public transport sector.

“As the industry starts to use the same standards for data, it will be easier to collaborate on technology development. Better utilisation of resources and better technology solutions are practical benefits of open source.”

Impact (ecosystem level)

From a cost perspective, it is estimated that the development of the NRP platform based on open source has not resulted in any cost savings compared to procuring a standardised end-to-end solution. The perception that open source is traditionally seen as a cost-saving option has not been the case with NRP. Instead, it should be seen from the perspective of having control over the system development process and improving the value proposition.

Experience from the NRP estimates that it takes at least 20 per cent more time to develop a codebase for an open source project because it needs to be more customisable, well documented and scrutinised by others. Other development teams at Entur have been under greater time pressure, which has meant that their codebase has yet been published as open source. Entur is subject to public procurement rules, which have created challenges in supporting and funding the development of global open source projects, such as the OTP, which is managed by a not-for-profit organisation registered in the state of New York, USA. Procurement rules prevent support for international open source projects, which is an unresolved issue for Entur. The development team expresses the need for regulatory changes to promote industry-specific open standards and projects, as well as the need for better structures to support significant open source projects and ensure their long-term viability from a public perspective.

“This is still an unresolved issue that we are actively working on now to get some kind of centralised funding. It is not about large sums of money. We need funds to finance someone to administer large open source projects, for example.”

As a new organisation, Entur had the opportunity to establish an incremental-agile development methodology and digital culture from the start. The support and understanding of its own management is also described as having been significant in supporting the development team in changing the modus operandi and mindset of the public transport sector. The challenge of digital transformation is described as being linked to the need for other types of capabilities and structures than those that exist today in the public sector. At the time of the interview, Entur had approximately 21 different teams with a high degree of autonomy working according to agile system development methodology.

Discussion

The NRP journey depicts the importance of people with the skills, experience and tenacity to break the prevailing procurement practices in the public transport sector to introduce incremental development methodology, digital culture and collaborative partnerships with actors in the open source community to achieve transport policy objectives. One of the major challenges was the digital immaturity and lack of cultural understanding among public sector decision-makers about how incremental digital service development is conducted and the importance of participation in open innovation processes. One of the main obstacles was changing the mindset of decision-makers away from waterfall-based processes and deliveries to an iterative, incremental, collaborative, and distributed development process with actors in the digital ecosystem. The problems were not linked to the organisation itself, but to those responsible in ministries and within the project steering group who had difficulty reconciling themselves with collaborative development based on non-contractual partnerships. The lack of understanding manifested itself in the recurring focus on cost, requirements specification, deadlines and project period, instead of valuing agility, flexibility, iterative adaptation and participation in the collaborative development with actors in various open source projects.

This is consistent with studies that have examined several large traditional industries, where decision-makers and managers are reluctant to change established approaches and existing business models, as it affects profitability and the value proposition in the short term towards something uncertain and unfamiliar (Warner and Wäger 2019, p. 330). The challenge of digital transformation (DT) for organisations is that it creates tension between existing business models, value propositions, technologies and the exploration of digital technology characteristics that can lead to added value and new business models (Chesbrough 2010, p. 358). This is especially true for traditional sectors and organisations that are constrained by the prevailing culture, routines and structures that create barriers to radical change, as it can be seen as counterproductive and irrational (Skog et al., 2018, p. 434). DT has a radical impact on an organisation and its environment, which has economic and organisational implications for incumbent firms. For example, permeable and malleable organisational structures that facilitate participation in digital ecosystems (Hanelt et al., 2021, p. 1167).  In the analysis, this is manifested by Entur setting up business structures from the beginning to be able to participate in the collaborative development in various open source projects and thereby become involved in cross-organisational open innovation processes with actors in the digital ecosystem. Decision makers in Entur’s environment have a lack of understanding of digital culture and how innovation occurs in the digital ecosystem.

Another cultural aspect that is a barrier for DT is the perception that the public transport sector is unique and requires specific domain knowledge to develop system solutions within the sector. This is indicative of a ‘not invented here (NIH)’ mentality within the sector, which is a barrier to participating in open innovation processes (Bogers et al. 2019) and changing the existing system logic regarding how value propositions are created. The perception within the industry may also influence the lack of pressure for change manifested in the analysis. None of the system providers’ end-to-end solutions used digital technologies and open standards. Most modern digital technologies are largely open source and are in many cases critical to transforming the value proposition of traditional sectors and organisations (Urbinati et al. 2020; Nambisan, Wright and Feldman 2019). Together with agile development methodologies, this creates the conditions for iterative exploring of how modern digital technologies and business resources can be combined to create required design space to enable digital innovation (Skog et al. 2018, p. 434). In the study, such design space materialises during the development phase thanks to insight into the use of modern digital technology, iterative-agile development methodology, participation in open innovation processes and the use of open standards to augment the value proposition to travellers.

One challenge with open source is the difficulty in determine the projects viability. The analysis illustrates the problem that even relatively well-known open source projects with active communities – such as OTP – can have poor code quality that makes maintenance and further development difficult. For outsiders not involved in the community’s development work, it becomes almost impossible to assess the viability of an open source project. In addition, trust is required for new members of the community to participate and influence the development of the project, and this takes time to build. This makes it difficult to estimate the cost in terms of time and resources needed to fix problems. This observation is in line with Shaikh and Levina (2019) paper concerning the difficulty of assessing viability for third parties. Their article also shows that tech companies with long experience of participation in open source projects are prepared to invest in creating a viable community because it is an important source of innovation, which is consistent with Entur’s decision to invest significant resources in the OTP project.

This study shows that long-term engagement in the open source community brings benefits that manifest themselves in the form of the ability to recruit, retain and create access to a larger pool of experienced and skilled developers both nationally and internationally. At national level, the opportunity to recruit motivated, skilled and experienced developers who want to work on cutting-edge technology, interesting societal challenges and be part of something bigger is observed. This contribute to the entrepreneurial and start-up culture resulting in a rapid pace of development. This observation corresponds with a study showing that experienced developers in the open source ecosystem are motivated by participating in projects with an altruistic focus and want to work on meaningful tasks that have a positive impact on societal development (Gerosa et al. 2021). Internationally, participation in open source projects is described as having created interest and goodwill among developers, creating access to a global pool of expertise that was utilised in the development of the NRP. Similar phenomena have been observed in studies that have examined how companies, usually larger ones, participate in open source projects and communities to gain access to external sources of knowledge, which is an important part of the innovation strategy of businesses (West and Gallagher 2006). The analysis show that open source does not necessarily lead to cost savings compared to the procurement of end-to-end solutions, but rather is an alternative approach to achieving high levels of ambition, enabling digital innovation and transforming the value proposition.

The circumstances prior to the NRP, depict an oligopolistic market with entrenched positions and a lack of pressure to change the system logic around the value proposition within public transport sector, as the supplier can benefit from the existing market logic. As the NRP platform spreads nationally and previous end-to-end solutions are phased out, the previous system logic around the value proposition quickly becomes obsolete and erodes the market position of the earlier system vendor. When this happens, Entur is accused of using its position to outcompete Norwegian companies with decision-makers in the relevant ministry. Resistance from the system vendors manifests itself during the deployment phase, when introducing the national journey planning platform to the Norwegian public transport market. This differs from Skog et al.’s (2028) theorisation of digital disruption, which suggests that resistance from actors threatened by radical change occurs during the development phase before the digital innovation is introduced.

In addition to the benefits of accessing external knowledge sources and integrating them into its own innovation process, further benefits are realised when they establish themselves as a core member of the OTP. As a core member, the organisation needs to balance its own needs with the demands of the members to create a dynamic and attractive community. For public organisations, an administrative and leadership role in open source projects is challenging. The exact problems are not detailed, but the analysis shows that the NRP has resorted to creative solutions to support the OTP, which is managed by a non-profit organisation registered in the US. There is a need for regulatory changes and structures to support open source projects and standards that are important to drive development in certain sectors, such as the public transport sector.

An important factor to change entrenched positions and dominant design is the mandate to change the system logic of how value propositions were created in an traditional sector as public transport. This study shows such mandate can eliminate intermediaries and gain control over the development process, which enables iterative exploration of digital technologies to improve service and value offerings to transport operators, regions and travellers through a multi-sided digital platform (Abdelkafi et al. 2019). The case is in line with the theorisation of digital disruption according to Skog et al. (2018, p. 432), with the need to disrupt existing value chains and relationships to enable the improvement of the value proposition by creating a more direct interaction between producers and consumers of services, contributing to better innovation and synergy opportunities.

The study of multi-sided digital platforms that offer the interconnection of producers and consumers, individuals and organisations in an innovative way, simplifying interaction and streamlining transactions, enabling exponential and radically improved value creation (Cusumano, Gawer, and Yoffie 2019; McAfee and Brynjolfsson 2017). In addition to the mandate, the use of open source projects and components was also part of the success, enabling global access to skills and expertise through participation in various open source communities. The use of open standards also helped to create synergies, data re-use and the re-utilisation of common components, which allowed them to free themselves from the lock-in effects caused by previous procurement of proprietary end-to-end solutions. The case in this study is unusual as it is a public organisation that is reshaping and creating digital disruption in the public transport industry, making it an interesting case to study.

Categorisation of observed phenomena

The purpose of creating preliminary categories of observed phenomena is to facilitate further study and provide insight into the significant factors influencing the digital transformation of traditional sectors and organisations.

Phenomena	Description
Digital technology and innovation	Digital technologies have properties that allow digital resources (data and information) to be processed, transformed, combined and exploited in new ways, resulting in new services and products that were not possible with previous generations of information technology. Digital technologies are self-reinforcing and generative, allowing for increased design space in exploration. This can lead to digital innovations that have the potential to radically change the existing system logic of value propositions within an industry or sector. Another characteristic of digital technology is the continuous testing, integration and delivery of new functionality and security updates. Many standardised end-to-end solutions are based on previous generations of information technology that do not have similar characteristics.
The client organisation’s dilemma	Current public sector norms and governance that promote procurement of standardised services and products are obstacles to keeping up with incremental digital development. Standardised services and products often create supplier dependencies, do not change existing system logic for value propositions, do not lead to competitive advantage, entail high costs due to lock-in effects and hinder digital transformation.
Digital immaturity	There is a lack of understanding among senior managers and policy makers about how digital innovation occurs and the importance of participation in open innovation processes to enable knowledge sharing and identify synergies with actors in the digital ecosystem.
Balancing conflicting objectives	Participation in digital ecosystems and open source projects requires the ability to prioritise between the needs of the incumbent firm and development initiatives requested by the community in strategically important projects to ensure survival.
Global pool of expertise	Participation in open innovation processes with actors in the digital ecosystem creates access to a global pool of expertise. Participation creates goodwill among community participants and allows for the exchange of ideas, knowledge and collaborative partnerships where development needs may overlap between the organisation and the open source project.
Cultural gap	The cultural gap between traditional organisations, especially in public sectors, and digital ecosystem actors is significant. Traditional organisations rely on contractual relationships, outsourcing and cost efficiency, while digital ecosystem actors rely on trust-based collaborative cooperation, based on meritocracy and transparency to solve common problems via self-organised communities and networks.

Summary

The study describes an unusual case where a public organisation creates digital disruption by changing the system logic of how value is created in the national public transport system. To improve the value proposition, existing business relationships with system vendors needed to be terminated to achieve transport policy objectives. This to gain control over the system development process and exploit digital technology. In order to create the design space needed to generate digital innovation and change the prevailing dominant design that exists in the public transport sector. Political decisions to consolidate responsibility into a new governmental organisation with competence and experience in collaborative culture and development, enabled a radical change in the value proposition to stakeholders and travellers. The collaborative development work described in the case is based on trust, meritocracy, transparency and poses challenges as public procurement rules and procedures are not designed for contractless collaborations and support to non-profit organisations that often manage open source projects.

The study reveals structural barriers for public sector organisations to participate in the digital ecosystem that is important for improving the value proposition to end users. In addition to the structural problems, the study shows a lack of understanding among senior managers and decision-makers in the public sector of the importance of knowledge exchange that takes place in open innovation processes to digitally transform traditional businesses and sectors. If public organisations are to improve their value proposition to end-users, the study shows that alternative procurement methods are needed to the current practice. This is particularly true in markets where oligopolistic conditions prevail and where there is a limited range of vendors and solutions, which will favour dominant designs, create supplier dependency and hinder digital innovation. Procurement of standardised proprietary solutions often locks users into old technological solutions, limits the possibility of knowledge exchange through open innovation processes, and hinders iterative, incremental digital service development needed to digitally transform businesses. A single case limits the generalisability of the study, but shows an interesting phenomenon of how a public organisation creates a better value proposition to passengers and operators through digital disruption and radically changes the public transport industry nationally.

References