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.

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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.

From City 1.0 to Smart City 2.0

Cities are stuck in a Web 1.0 stage! Today city authorities struggle with their old-fashioned internal structures. The administrative processes need to see adaption that reflect state of the art technology and meet the expectations citizens are used to from their privat medial experience. Currently information is made available for passive use only. Municipalities must define conditions that allow connected society by e.g. providing open data, infrastructure and legislation. Only this way industry can rely on a framework that allows the set up of new business models and investments beyond election periods.

“Smart City“ resembles a Web 2.0 stage! McKinsey identified 5 city archetypes that vary in their degree of maturity and centralization. Depending on their state of maturity variances in CAGR and CAPEX are remar- kable. Consequently the key success factors for doing busi- ness with them vary significantly as well as the process and requirements to transform them from a “city” into a “smart city” (SC).

PIKE research characterizes SC as“… the integration of technology into a strategic approach to sustainability, citizen well-being and economic development. SC should be seen as a complex confluence of several existing markets, as well as the driver for new, emergent solutions that span several of these traditional domains.”

Looking at the current situation “Smart City” has not yet picked up. All stakeholders seem to be stuck in silo mentality and focus on pilots. Sustainable solutions and scale up is missing. The definition of key success factors will help technology providers as well as cities to move forward together. The way towards „City 2.0“ has just begun.