When you hear the term 'city government' you may think of a bureaucratic monolith instead of hotbed of innovation. But many cities--like Tampa, Denver, Phoenix and San Diego--are transforming themselves and developing new approaches to age-old urban issues while also creating opportunities for entrepreneurs.

Cities are following the startup formula to jumpstart their innovation economies. Forming incubators, accelerators and hosting hackathons are all great beginnings but it's no longer good enough to simply put people in a building and walk away. City leaders must be all in and think like startup founders. Applying the same rules that make your young company a success can also build a startup ecosystem. Here are three ways cities are embracing the startup life.

1. Embrace agile methodology

Your ability to pilot and pivot is a big part of your competitive edge. When done right, the startup spirit can fuel everyone in your company to think differently by default. You may not have realized it but in doing this, you are creating a platform for innovation.

The City of Denver is doing this exact same thing in the area of smart cities. They recently announced a partnership with Panasonic to develop the Peña Station Next, a 400-acre, $500 million fully connected community. This living lab will be laden with sensors and cameras, which will deliver data to optimize every aspect of the urban experience. On-demand robotic shuttles will reduce traffic, wirelessly controlled streetlights are set to conserve energy, environmental monitors will determine when is the best time to plow snow or where to place solar panels.

Denver is a city with a lot going for it, with folks flocking from both coasts to enjoy a beautiful city with a bursting tech scene. But as you know, even if your company is already a wild success, it's no reason to rest on your laurels. There is always a way to expand, enhance, explore. And likewise with Denver. Instead of taking a break and enjoying the ride, Denver is supercharging its approach. Kelly Brough, President and CEO of the Denver Metro Chamber of Commerce states, "Our future won't look anything like our world does today. And, technology is the driving force for those amazing changes."

2. Consider every opportunity to partner

As a young company, you have to do more with less so that every person you meet can be a chance to bolster your business. You also have to constantly search for opportunities missed by your competitors, which often means reaching out to unlikely allies. Arizona Governor Doug Ducey did exactly this when he welcomed Uber to test their driverless vehicles in the Phoenix area after California regulations scared them away.

This kind of aggressive push to partner with the private sector is becoming more common for cities that want to move away from being stuck with months-long procurement processes that don't solve for modern challenges. In his recent State of the City address, Phoenix Mayor Stanton stated, "The most important element of today's economy is innovation... to change the course of our economy we couldn't do things the same way - we had to shock the system."

He goes on to describe a Resource Innovation Campus, which will house waste materials that entrepreneurs and manufacturers can repurpose into "new products and profits." For example, one business owners is converting palm fronds into animal feed and expects to make up to $10 million in annual sales each year. Another is "finding new use for discarded mattresses--keeping up to 160 mattresses out of the landfill each day." Not only are businesses getting a boost, the city is saving money by reducing waste removal costs while enjoying the triple bonus of benefiting the environment.

3. Build for the future

There is something to be said for enjoying the present moment, but as a savvy entrepreneur, you are always planning for what's next. Longevity requires hyper vigilance about where the market is moving, how trends will affect your company and how to lay a strong foundation for the coming decades.

San Diego is a city that takes this same approach. By embracing innovation and change while forecasting the future, they made the decision to invest in their city's technology infrastructure. The result is the largest city-based IoT platform in the world, which will provide ample opportunity for new sensor-based products and services that can both deliver environmental upside while saving the city millions a year. The city did this by following the first two rules, deploying agile thinking and embracing new partners. It doesn't hurt that corporate Qualcomm calls San Diego home, infusing a spirit in the city that confirms connectivity as a no-brainer. San Diego Deputy COO, David Graham recognizes the long-term impact, "I see streetlights as the platform to transform our communities," he says. "They can help us connect us to our citizens, to provide a future where we're able to better understand our neighborhoods and give them the services that they want."

Does your city act like a business owner?

Focusing on the user experience, starting small, experimenting and scaling fast, recruiting a diverse team, leveraging scarce resources to make major impact are all ingredient for success... Is this is a description of your approach to business or your city's approach to providing services? If you're lucky, they are one in the same.

Cities that embrace these principles will attract a swath of entrepreneurs who seek like-minded allies that create a supportive environment that can fast-track success. If your city is already on the path, enjoy the ride and do what you can to support those public-sector champions. If your town is a far cry from being an innovation hub, then get vocal about how government can embrace change. Because you know better than anyone, that the most important thing is to not get stuck but rather to get started.