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Estonia Smart Nation
Mike Barlow and Cornelia Levy-Bencheton13. February 20196 min read

Estonia: Smart Nation on the Baltic Sea

What does it take to turn a national bureaucracy into a smart government? It’s not too often a country is given a clean slate from which to start. But for Estonia, a small nation on the Baltic Sea, that is exactly what happened.

A combination of pragmatism and instinct led Estonia to develop an e-government in the 1990s, soon after the country regained its independence from the Soviet Union. The Estonians didn’t pursue a digital future because they thought it would be cool or trendy. They followed their common sense, which told them it would be better to expend their limited resources on servers and networks, rather than on grand buildings and government palaces.


The backbone of Estonia’s smart government is X-Road, a homegrown data exchange system that shuttles information instantly and securely between thousands of databases. Estonia estimates that X-Road saves more than 820 years of working time for the state and its citizens annually. More than 900 organizations and businesses in Estonia use X-Road daily.

X-Road isn’t a loosely connected network of servers. It’s a highly secure platform for transmitting encrypted data with the precision and accuracy of a fine watch.

Estonia also has a strong national identity system underpinning its e-government infrastructure. Almost every Estonian has a secure digital ID which is used for an endless variety of transactions, from riding public transit to signing official documents.

Estonia’s smart government has no central or master database. Each agency or organization that’s part of the system stores and administers its own data. Information about your taxes, traffic tickets, land transfers, education, voter registration, healthcare and finances are stored in separate databases. Your information is encrypted. It cannot be shared without your knowledge and permission.

You can choose which healthcare providers see information from your other healthcare providers. You decide if you want your dentist to see information from your cardiologist, your dermatologist or your psychotherapist.

Blockchain technology is embedded throughout the system, making it impossible to move data in or out without leaving a digital trace. All information is signed, time-stamped and chained together to safeguard its integrity. All transactions are meticulously tracked and recorded. Data cannot be faked or manipulated, rendering it virtually incorruptible. When an agency, organization or individual looks at your data, you are notified. There are penalties for accessing data improperly.

The goal of X-Road is making life easier at every level. For example, when a child is born, the hospital enters the information in its database, which is linked to the national Population Register. The information is shared automatically with the various government systems that will ensure the child receives social benefits such as healthcare and education.

It typically takes about three minutes to file a tax return in Estonia. The forms are pre-filled; one click and you’re done. Need to refill a prescription? You can do it online or on your phone.

From the Estonian perspective, X-Road fulfills the three basic requirements of a secure and practical data exchange platform:

  • Data must be easily accessible by authorized users and organizations.
  • Integrity of data must be maintained. No third party should be able to make any changes to data while it is in transit.
  • Data must remain confidential during its journey. It must be protected from the eyes of unauthorized parties.


Building Trust Through Practice

Unquestionably, Estonia’s smart government system has benefited from a global phenomenon: People generally trust digital technology. We love our mobile phones, laptops, tablets and PCs. The irony, of course, is that trust in digital tech is rising as trust in traditional government is falling. That’s another reason why Estonia’s experiment in digital government seems so smart: It’s riding the zeitgeist.

Estonians today trust their system. But the trust wasn’t automatic; it was earned. “You earn trust through practice and execution,” says Linnar Viik, co-founder of the country’s e-Governance Academy. “It’s not just about being connected. You need to deliver value every day. We believe that a digital channel provides more accuracy, convenience, transparency and trust. But we have to prove it.”

The first part of the trust-building process is data ownership. “In Estonia, everyone owns their data. It’s not owned by the government. This was a fundamental and very important concept. It means I can give my data to the government and I can take it back. I decide who can look at my data and who cannot look at my data,” Viik says.

In a sense, every Estonian has an “on/off” switch controlling who has access to their data. As a result, Viik says, people don’t spend a lot of time worrying about whether their data is secure or not. It also helps that Estonia hasn’t experienced a large-scale data breach since launching its e-government.

The next part of trust-building is total transparency. “I have an overview of what data the government has about me,” Viik explains. “If I see the data is incorrect, I can trigger a correction.”

The third part of the process is outright honesty. “If I’m driving and I get stopped by the police and they check the status of my driver’s license and my car insurance, I will get a notification that my information was queried, along with the name of the police officer who stopped me,” he says. If Estonians believe the police have misused their data, they can request assistance from an independent investigator who will help them find out why and how their data was used.

Viik acknowledges that broad trust in technology has proved helpful. But it’s not a permanent free pass. “For most people, digital technology is a holistic experience,” he notes. “Today, there is a sense of techno-optimism. Many people trust Google more than they trust their bank. Many people would rather find a diagnosis on the web than talk to a doctor.”

All of that could change overnight. People are fickle and easily swayed by headlines. Trust in popular social media networks is eroding, and Viik is rightfully concerned the tide could turn against digital government. “That’s why we need long-term practices that build trust,” he says.

A simple and successful practice has been making email a formal communication channel between citizens and government. Email is a good place to begin building trust in digital government, Viik says.

“The email address of your government cannot be a black hole that never responds to you,” he explains. “Government needs to respond and confirm that it has received your message. You need to get a receipt saying ‘Yes, we got your message and it’s in our pipeline.’ The receipt must be generated immediately. Then it has real impact.”

No one forced Estonia to develop a smart government. They simply saw smart government as a logical alternative to traditional forms of government, and they followed their instincts. From our perspective, Estonia’s success is a great example of how nations use smart technology to tackle common challenges.

Mike Barlow and Cornelia Lévy-Bencheton write about the intersection of technology and social change. This article is adapted from their new book, “Smart Cities, Smart Future: Showcasing Tomorrow.” It’s available from Amazon and in bookstores.




Mike Barlow and Cornelia Levy-Bencheton

MIKE BARLOW is an award-winning journalist, prolific author, and business strategy consultant. He is the author of Learning to Love Data Science (O'Reilly, 2015), and coauthor of The Executive's Guide to Enterprise Social Media Strategy (Wiley, 2011), and Partnering with the CIO (Wiley, 2007). He is also the author of numerous articles, reports, and white papers on AI, machine learning, smart cities and digital transformation. A graduate of Hamilton College, he is a licensed private pilot, avid reader, and enthusiastic ice hockey fan. CORNELIA LÉVY-BENCHETON is a communications strategy consultant and writer whose data-driven marketing and decision support work helps companies optimize their performance in the face of change. As Principal of CLB Strategic Consulting, LLC, her focus is on the impact of disruptive technologies and associated cultural challenges that open up new opportunities and necessitate refreshed strategies. She is a published author and career financial services executive who has worked in the United States, France, and Switzerland. Ms. Lévy-Bencheton earned an MA from Stanford University, an MBA from Pace University and advanced certificates from New York University.