Damian Wagner-Herold: Smart city projects in the pilot trap

About Damian Wagner-Herold

Damian Wagner-Herold is an expert in implementing and scaling smart city and GovTech projects, as well as municipal collaboration with start-ups. Through his roles at leading public utilities, consultancies, the Fraunhofer IAO, and as an entrepreneur, he has successfully implemented innovation and digitalization projects in over 90 cities across Germany and Europe. In addition to his work with municipalities, he is a co-founder and board member of the angel investor network DVVC in Ulm and operates hydropower plants in his hometown of Freiburg.

Mr. Wagner-Herold, is "Smart City" just a buzzword or a crucial concept for the future of our cities?

Smart City is both. On one hand, the term makes digital transformation tangible; on the other, its concrete implementation determines whether it leads to real improvements for administration, citizens, and businesses. Storytelling and clear communication are therefore critical to success. At the same time, interoperable solutions with viable business and operating models are essential, along with administrative processes that support these.

From my experience with European Smart City programs, the MPSC, and India’s 100 Smart Cities, I see a common theme: Smart City is a learning process. Innovation means experimenting, failing, improving—and learning from each other. Cities that actively engage in this process secure their future viability as places to live and do business.

How well is Germany positioned in this area compared to other countries? Are we pioneers or lagging behind?

Germany has made important contributions with the MPSC program, but it often lacks early concepts for scaling, sustainable operation, and organizational integration. Additionally, cooperation with public utilities, business partners, and start-ups remains an overlooked area.

When I led one of the first European Smart City consortia in 2015, we involved 50% business partners from the start. This helped create sustainable structures and business models and address operational challenges early on. This requires a "culture of enablement." Unlocking this potential is the core of my work when bringing municipalities together with start-ups and innovative companies—whether through innovative procurement processes, real-world laboratories, or early development of operating models.

Overall, I believe Germany is undergoing a steep learning curve in digitalization and smart cities. Many European projects have already gone through this process, which is why I see exchange as crucial and actively promote it as someone familiar with both worlds.

What are the main challenges in implementing innovation projects in German municipalities? And how can they be overcome?

Technology is usually just the tip of the iceberg when it comes to challenges. The major obstacles lie beneath the surface:

• Rigid, risk-averse, and heavily burdened administrative structures
• Complex, innovation-hostile procurement processes
• Lack of expertise and capacity for operation
• No sustainable integration and financing beyond the funding phase

There is often a "coalition of the willing," but the average German municipality lacks the resources and capacities of cities like Munich, Hamburg, or Stuttgart. At the same time, innovation requires cooperation with business partners, public utilities, and start-ups. So far, the MPSC has been too hesitant in this regard. Without early strategies for scaling and operation, projects risk falling into the "pilot trap." The real value emerges when technology is interoperable and accessible via a (full) service model.

There are also great examples of holistic approaches: In Ulm, we worked with an AI start-up to make an unlit area safer with a digital companion. With the Ulm Innovation Engine, we combined a competition with a co-creative testing process for start-ups and an innovative procurement procedure. Within just eight months, we went from idea to implementation.

You frequently mention that Smart City projects often get stuck in the "pilot trap." What does that mean, and what are your recommendations to avoid it?

Many projects fail because they lack a strategy and funding for scaling and operation. Often, initiatives dissipate, and established structures collapse once funding ends. Cities must adopt an entrepreneurial mindset, particularly regarding the customer journey—the benefits for citizens, visitors, and businesses.

A good example is the "revitalization" of our city centers. Their advantage over online retail lies in better visitor experiences. Cities must consider from the outset how to develop scalable business and operating models, cooperate early with business partners and public utilities, and use procurement models that foster innovation and partnerships with start-ups.

For further insights, I recommend our European Smart Cities assessment, conducted for the European Commission on scaling Smart Cities: Avoid the trap: From piloting projects to upscaling.

How can genuine citizen participation in Smart Cities be achieved?

Citizen participation should go beyond merely collecting opinions—it should actively shape solutions. The key lies in combining clear, professional communication that makes processes and outcomes transparent with co-creation involving those affected.

For example, in Eindhoven, we collaborated with residents to install smart lighting around a neglected pond for joggers and dog walkers. In Freiburg, the Green Industry Park remains supported by around 30 companies and organizations even after ten years, thanks to a well-thought-out communication strategy.

What city do you consider a role model for Smart City projects?

There is no universal blueprint, but there are inspiring examples and pioneers. While metropolises like Copenhagen and Amsterdam lead the way, I find the transformation of smaller German cities particularly impressive—such as Ulm, Konstanz, or Pforzheim.

Ultimately, interoperable solutions and sustainable organizational structures are key. Leipzig has systematically built up its Digital City department, which now drives many successful projects. However, this also shows that success takes time, perseverance, and political will.