Smart City Expo World Congress – Day 2

Again some quotes (as I understood them)…
Plenary session “Governance Challenges for Smart Cities”
Antoni Vives I Tomas, Barcelona, Deputy Mayor for Urban Habitat:
Segmented structures: ‘We have a lot of smart industry, but we lack smart politicians – and I am a politician. We have authorities and experts but industry doesn’t have a real client – and that’s the problem. Therefore industry can continue selling us products, but that doesn’t solve our problems. {…} We need to restructure our organisations.’
Pilot projects: ‘I hate pilots – I am fed up with small solutions for parts of the city – it doesn’t help, it is a waste of money, it is just for the press. {…} You as industry should ask for visions.’
‘Pilots encourage the eagerness for quick solutions. And when you have a stupid mayor and a company selling products you have stupid solutions, short sighted, but no smart city. {…} We need a city protocol that demands a vision and long term solution.’

Business models: ‘If you (industry) expect payback over 6 years, don’t come to us – if you are willing to build up an industry structure over 30 years we are partners.’

Charbel Aoun, Schneider Electric, Senior Vice President, Smart Cities:
The following barriers make it difficult to deal with cities:
a) Structures: ‘We don’t understand cities – municipalities are a blackhole for industry.‘ {…}
‘Don’t break the silos – I cannot talk about breaking silos, we as industry are structured as silos ourselves. But we need a change of paradigm and find a way to work across silos. We need to implement hybrid structures.’
‘If you want to create a collaboration mode we have to erase the term competition.’
b) Requirements: ‘Cities tell industry we need xyz. Then you have a lot of power point presentations and use cases and then you don’t know which one to take. If I decide for one, would I be stuck with this supplier? What exactly do I get? Industry is a blackbox for cities.’ {…}
c) Regulations and procurement: ‘If we have identified a solution, we can not implement it because of restrictions, regulations, procurement processes.’ {…}
d) Financial models: Smart city requirements are something new for the financial sector. Currently cities thrive for the wellbeing of their citizens but … ‘Would you find a bank to finance “better live”?’ {…}
e) Business model: ‘If you bring in 10-15-20 players to a project, how do you handle this? Who should handle this? What is the business model behind it?’

Pilots: ‘If a solution has already been showcased another pilot is waste of time. Therefore no more pilots, pleeeaaase.’ {…}

Laura K. Ipsen, Microsoft, Corporate Vice President, Worldwide Public Sector:
Pilots: ‘We start projects with a workshop to identify what a city needs. Instead of going for a pilot we ask to build a sustainable ecosystem, that can be transferred to other cities with similar challenges, e.g. Olympic games.’
Collaboration: ‘What private sector can do better is collaborate with each other.’
{…}

GE2 Parallel Session “EU Smart Cities and Communities”
Colette Maloney, DG CONNECT European Commission – Smart Cities and Sustainability, Head of Unit (Belgium):
Smart Cities and Communities EIP (European Innovation Partnership)
• aim to have transformed a number of cities into smart cities by 2020 (how many was not said)
• aim to fund large scale projects, light house projects, this is the focus of Horizon2020 (successor of FP7) and difference to previous funding policy. These large scale projects shall demonstrate the use of technology, not necessarily technology innovation.
• has no focus on pilots but on scale up projects – which so far is not seen in Europe, and the reasons seem unclear. This is the reason why EIP looks into the questions:
o What are the barriers?
o What standards are needed?
o What can be learnt from city projects so far? Knowledge sharing amongst cities what has worked, but also what didn’t work?
• seek to break down “silos” between energy, transport, ICT and consolidate European Commission’s initiatives under “one roof” – this affects cities amongst themselves and with industry.
• want to encourage interaction and technological integration rather than technological innovation in order to overcome the lack of sustainable business models.

Magdalena Andreea Strachinescu, DG ENER European Commission – New energy technologies, innovation and clean coal, Head of Unit (Belgium):
• Horizon 2020 Budget 2014-2015: 1.254 mio EUR → 2/3 of budget will go to Smart City
• In the calls to come, the EU would like to see more cooperation across Europe: North-South-East-West, different climate zones, structures…. ‘Identify common challenges and address them with scalable solutions.’

Smart City Expo World Congress, Barcelona

First day of the congress started – here are some quotes that perfectly fit my theory that Smart City is not about innovation of technology but about a revolutionary approach in organizational structures….

Keynote
Kent Larson, Principal Research Scientist and Director of the Changing Places Group, MIT Media Lab, Department of Architecture and Media Lab, Cambridge, USA:

* ‘We developed cities in segmented areas over time and realize the limitation of this concept. Segments are not made to scale.’
* Buildings originally were constructed like skeletal systems and progressed to structures that add blood circulation to the bones. ‘I think next stage is comparable to the nervous system of a body.’ The implementation of sensors make data available and actionable information possible. Challenge is to get acceptance of people – young people love it, baby boomers not so much. Therefore the transformation process to smart solutions will be a bottom up approach over time.
* ‘People, especially young people increasingly prefer to share and use than possess.’ referring to the cover story of The Economist.
* From the audience the question how to commercialize the impressive technology shown was raised. Larson’s idea is to encourage students from MIT and other academia to set up startup companies. These startups than need to be fed into large corporations for them to roll out large scale solutions. ‘Governance should encourage this.’.

Plenary session “IT city integrated vision”
* Chris Vein, Chief Innovation Officer for Global Information and Communication Technology Development, World Bank, Washington DC, USA quoted Mike Bracken / UK: ‘”In an analog world policy dictates delivery. In a digital world delivery informs policy.” This entails a whole new way of organising our business processes.’ – Exactly! – Couldn’t have said that any better 😉

Plenary session “The Future of urban Sustainability”
Amitabh Kant, CEO & managing director, Delhi and Mumbai Industrial Corridor Development Corporation, New Delhi, India:
* ‘Horizontal integration is key to urban development – this is difficult for retrofitting, much easier in greenfield. {…} Segmented urbanisation is dead.’
* ‘Technology is not the ultimate solution. Technology has to harnest the people. People make it a vibrant city, not technology. Emerging countries have an advantage and are the ones to make a sustainable planet.’
* ‘Smart City, Connected City, Intelligent City Concepts – are all dead, if corporations like IBM, Siemens, Schneider – all the big ones that exhibit here today – continue to supply in silos! You need a revolutionary approach.’

Sylvie Spalmacin-Roma, IBM, Vice President, Smarter Cities, Europe:
* ‘Data becomes a natural resource in itself. {…} Cities across the world are mainly structured in silos. This is not a bad thing, as you need experts in the segments. But for sustainable development data needs to be used across segments.’
* ‘Many cities move to horizontal organization to make use and integrate data available. This was the bases for the Rio project.’
* ‘Coming back to your (Amitabh Kant) point of corporations working in silos: There is a need of combination of public and political players. Municipalities can help private companies to understand the needs and work together.’
Factual-, observational- and social media data can now be integrated and put into actionable data. Motivation for cities to do so is to reduce operational cost. This can easily be done by analysing data available. Innovative projects can then be paid out of the savings.

Moderator Cristiana Fragola, C40, regional director Europe, Milan, Italy:
* ‘I think it is common understanding of this panel that a smart city first of all is about integration, integration, integration. Even before upgrading aged infrastructure.’

Sam Adams, Managing Director, City Club of Portland, Portland, USA:
* Political top ranking issue should be: ‘Set goals! Set goals what kind of city you want to be. Only afterwards use technology to achieve these goals.’ Currently the focus is on technology and implementing solutions without necessarily paying to a big picture.

Larry Ng Lye Hock, Urban Design Director, Urban Redevelopment Authority, Singapore:
New developments now put sociologists in first place rather than architects and city planners.

More to come 😉

Business WITH cities is crucial for sustainable business IN cities

At the end of the day all city pain points conclude in the keyword “budget”. On the one hand city authorities need to reduce cost: Smart solutions based on ICT can help municipal efficiency (e.g. eGovernment). Besides the savings cities need to secure income. Most leverage lies in tax income – however this source seems to be a fragile one.

Tax losses drive Revitalization of Industrial Parks
This week I had an interview with the Agency of Economic Development of a city in southern Germany (approx. 600.000 inhabitants). A huge problem seems to be the aging structure of industrial parks and the emigration of companies – of tax payers.
The history of industrial parks in Germany dates back to the 1970s – an “import” from the UK. The first generation consisted of approx. 80% storage / production – simple buildings, greenfield development, often located close to the motorway. Only in the mid 80s the share of office space increased and the “integrated location” – often as conversion of traditional industrial land – connected to town through improved infrastructure gained relevance.
These structures come to age now and need revitalization with state of the art technology and logistics in order to maintain attractive for industry.

Cities leave their enclosure for Industry to expand the value chain
Cities seem to be interested to analyze these areas for “smart city solutions” – technologically as well as with new business models. There are various examples where industry and city jointly develop concepts how to revitalize these areas. New forms of partnering, be initiatives or public-private partnerships (PPP) show that “City” leaves the traditional enclosure and opens towards industry. “Ingenieursmeile Mannheim”, “InnovationCity Ruhr”, “Neckarpark”, “Synergiepark Vaihingen” are only a few examples where industry takes an active role in a traditional municipal domain.
Industry, respectively product suppliers, expand their position in the value chain and try to get hands on analyses, consulting, planning on the one side of the chain as well as operation on the other side of the value chain.

With the early involvement of industry in core municipal domains the roles of city and industry change. The impact of technology providers on regulations and tender grows. It therefore seems crucial for industry to work WITH cities in order to secure its business IN cities in future.

PPP

Public-Private Partnerships (PPP) are a way to escape the short-term election-cycle trap. By leveraging public goods to foster private investment, save money, and create new long-term benefits city has an attractive financial model and industry gets a reliable timeframe for investments.
There are examples for e.g. infrastructure trust where private companies can invest and get concessions for 10 or 20 years to operate facilities. In a McKinsey report i read about an example in Washington/US where the mayor Vincent C. Gray initiated an “App for Democracy” to an open community platform developed for submitting non-emergency service requests to the city. The first edition of “App for Democracy” yielded 47 Web, iPhone and Facebook apps in 30 days—a US$ 2,300,000 value to the city at a cost of $50,000.

City Insights for a successful Transfer to “Smartness”

When following the discussion around Smart City the pace of change seems to accelerate (I wrote about this change here in my blog already). It is therefore likely that we hit a new inflection point even faster: The collaboration amongst city and industry. I want to find out about the drivers for this development. Since May I conduct a scoping study analysing the pain points of the stakeholders involved. Today I talk about the findings from my interviews with cities. The next set of interviews will focus on industry pain points in order to identify aspects that diverge or and can be put forward to a joint agenda.

Cities in the panel were all in Germany with approx. 300.000 to 1.4 million inhabitants and most of them just about to leave their Web 1.0 stage (I spoke about this analogy in another post here in my blog – just check my keywords).

Willing and open to remain or gain solid
Insights are quite interesting, as there seems to be a lot of willingness to implement “smart” solutions for a better living and working in town. This willingness seems to even find ways for budget and overcome traditional structures – against all prejudices.

When asking for the motivation to set up a Smart-City-Concept the commendable argument mainly is to reduce CO2 emissions. Well, well…. don’t make me believe that Goethe finally succeeded with “Man should be noble, helpful and good”. Putting “CO2 reduction is important” on the town banner is motivated by the EU 20-20-20 targets and the fact that cities pay penalty, when failing. Additionally there is a marketing approach for being a “green” town – green often is associated with innovation and good living-atmosphere. Both aspects are quite important for industry and citizens – finally these two stakeholder groups are the pivot point when transferring from City 1.0 to City 2.0.

Comparing various balance sheets from cities approx. half of the budget is from tax-income through industry and citizens. However half of the spendings go into personnel cost – wow! Of course there is a need for the well-being of industry and citizens – how should otherwise the organization be paid?! But maybe that is a bit too sarcastic for a generally great approach few municipalities show in opening up to see what happens outside town halls walls. So bottom line key driver for transferring to smartness seems to be financial liquidity.

No standards in organisational structures
For interviews I needed to find out “Who is in charge of the Smart-City-Agenda?”. Well, first of all, none of the cities I asked said “What are you talking about?”. Means – there was some sort of Smart-City-, Connected-City-, Future-City-, Smart-Society-Agenda around. The responsible sector of course shows the focus for the transfer to City 2.0. At the “Smart City Event 2013” in Amsterdam I learnt that Buenos Aires created a “Ministry of Modernisation” – the cities I talked to didn’t have such a cross-segment authority. Sometimes I interviewed with civil servants from the building-, environment-, energy- as well as the economic promotion authority. Most of them saw the content to smartness in their segment – at least to start with. Having said that they all admitted that in an ideal world the approach would be across authorities – the bigger the town the more difficult it seems. However the awareness to collaborate is definitely there and raising awareness is the first step forward!

City key success factors for transfer
With the following insights I summarize what cities think is necessary in order to transfer from City 1.0 to City 2.0:

1) Need for Leadership:
Without a passionate mayor who has a long-term vision – even beyond election period – a transfer will not happen.

2) Encourage Internal Collaboration:
Synergies between authorities can enable milestones in the smart-city-agenda regarding budget efficiency, funding, processes and speed.

3) Create new Ecosystems:
Make use of the “neutral” position and initiate round-tables for industry. City authorities are amazed that even interfacing industry is not talking with each other. Cities can initiate to bring companies together, inspired by a government initiative, to solve a complex problem.

4) Initiate Public-Private Partnerships (PPP):
PPP are a way to escape the short-term election-cycle trap. By leveraging public goods to foster private investment, save money, and create new long-term benefits city has an attractive financial model and industry gets a reliable timeframe for investments.

5) Get external consulting:
Without disregarding the competences of civil servants state of the art research happens on industry side. Instead of defining a set of requirements alternative solutions and options can be developed in collaborative exchange with industry experts.

What is next?
In the second phase of my study I will interview industry. First informal talks indicate challenges when working with cities in the area of out-of-date regulatory; intransparant, complex and time consuming processes; administrative hurdles; runtime Return on Investments and hesitation to share knowledge with other technology providers.
Knowing the pain points of both sides I will cross check in order to find out if there is common or contradicting interest and finally see, if a common agenda can be derived from it.

“Less regulation helps to speed up innovation” – quote from Smart City Event Amsterdam

Currently I am at the Smart City Event Amsterdam. From the presentations so far it seems as if cities are undergoing a change form being the central directive, requesting supply for a segment demand, to being one of many stakeholders who jointly look to solve city pain points. This can happen by push- (city) as well as pull- (industry / citizens) initiatives. So the “top down” and one directional way of city projects seems to transfer into a networked solution approach, that also encourages “bottom up” initiatives and impacts business logic from business “in” cities to business “with” cities.

Regulations often hinder innovative solutions and new business models
One statement of a city representative captures that quite nicely: “If you want to break the law, work with the city”.
City behaviour changes from a tactical to an entrepreneurical behaviour. Means, so far cities identified a painpoint, e.g. build a tunnel, install security cameras, improve lighting. Within the legal framework set up amongst governmental bodies on municipal, supra- and national level specifications for technology providers are written and tendered. There now seems to be tendency that city understands its role as a facilitator for solutions created by industry in a collaborative way. So instead of set technical specifications the painpoint and goal is announced and industry is invited to come up with ideas to solve it. The role of the city therefore changes to a facilitator of solution- and collaboration platforms.
It seems to be a win-win situation that allows various ways to achieve the goal and therefore provides multiple choices for the city. Even more there is the opportunity to drive change of regulations. It might be, that regulations have been set up by people who didn’t know better or circumstances changed over the time and regulations didn’t evolve adequately.

So concluding form the first day:
1) The self-concept of cities changes
2) The role of cities transfers from a one directional supply request to a facilitator of solutions, enabled by facilitating collaboration of various industry players.
3) Focus from EU, cities and industry shifts from getting pilot projects to find mechanisms and standards to scale up solutions.
4) Legislation “opens” to amend regulations to enable new business models
5) Barriers in collaboration amongst stakeholders are on organisation, finance, legal. Demand is that governments take leadership to facilitate collaboration and investment.

Data changes paradigm

New technology enables collective thinking and acting in a transdisciplinary manner. Flexibility, networking, real-time information and utility, rather than possession, are impulses consumers learn in the virtual world of ICT and expect action in the physical one. The use of new technology can change the way people consume, produce and relate to each other. This development accelerates with the growing group of Generation Z who are used to curating information online at a rapid pace, sharing thoughts and observations on a variety of machines, topics and products.

New paradigm is “possession vs usage”.
I am of the generation where one thrived to possess things. A one to one relationship. My car. My book. My … whatever. The object is in my possession until the end of its live cycle and then it is my problem to dump it. This one-way-, or silo-mentality perfectly fits the sort of old-fashioned structures in city authorities. There is an administrative office for every segment. Collecting data within each silo. Providing segmented data in a one on one relation for passive use. City is the sender. Like in the Web 1-0. Uni-directional, in a one on one or one to many relationship. Fostering silo-mentality.

The principle of “usage” however expands the number of participants.  Transferred to cities this means information changes from single to multi purpose. And using an object or data only in a fragment of its live cycle. By making data accessible (e.g. open data) citizens even have the possibility to actively create value. Like in the Web 2.0 content is generated by users and city becomes the moderator. Multi-directional, in a many to many relationship. The prerequisite for collaboration.