May’s steering group meeting of the Birmingham Smart City Alliance, held in Baskerville House thanks to the generous hospitality of Birmingham Science City, was an energetic meeting that welcomed four exciting new initiatives in the West Midlands.
A neighbourhood scale Smart City demonstrator
Digital Birmingham described a new neighbourhood-scale Smart City demonstrator project that is being put together with local and national stakeholders under the guidance of the Smart City Commission. The project will tackle issues including sustainable passenger and freight travel; citizen engagement; health and wellbeing; civic enterprise; and digital skills. The next shaping workshop for the project will be held on 2nd June. Please contact Digital Birmingham for more details, or make contact with the Alliance by commenting on this blog or through the Alliance’s Linked In group.
We discussed a new “Digital Leaders” programme for individuals and organisations across the UK involved in delivering sustainable and innovative digital transformation. The programme is intended to promote digital expertise and the adoption of technology, and is led by Cabinet Office. An Alliance member is taking a national role to support the programme and looking for collaborators to support it in the West Midlands. For more details, make contact with the Alliance by commenting on this blog or through the Alliance’s Linked In group.
Supporting Healthier Food Preferences
We also learned about “Supporting Healthier Food Preferences“, a new healthy eating initiative supported by “The Lancet” medical journal, intended to tackle obesity in Birmingham, including child obesity, and issues such as the saturation of many shopping centres by fast food outlets. The initiative will ask what business is prepared to contribute towards the healthy eating agenda; and what the public sector is prepared to contribute.
The fast food market has grown across the country – aided by online services such as “Just Eat” – but many local authorities are seeking to restrict them. Birmingham currently limits “fast food” usage of retail space to 10%, whilst some other authorities limit it to 5%. However, over half of Birmingham’s shopping centres are already saturated with such outlets by this measure, and many others escape these restrictions as they are classified as “restaurants”. In the meantime, child obesity is a growing challenge in Birmingham – 1 in 4 children in Year 6 are overweight or obese, and rising).
So what can we do? We will be holding a workshop to explore ideas. If you would like to join the workshop, please comment on this blog post or through the Alliance’s Linked In discussion group.
Data Citizen Project
Finally, Julia Higginbotham, Chief Executive of Rewired State, asked our help in connecting Birmingham’s institutions, particularly our Universities, to the “Data Citizen Project” Rewired State are running for the Office for National Statistics to understand the motivations and impact of the use of personal data in finance, education, health and travel. The initiative intends to develop a positive narrative for the use of personal data with consent. Again, if you or your organisation has something to add to the initiative, please make contact through the Alliance’s Linked In group or by commenting on this blog.
Our next steering group meeting is on Wednesday 10th June where we’ll be hearing from a new business-led Skills Action Plan for the digital and technology sectors and about InnovateUK’s new £10m “Internet of Things” demonstrator competition.
Chair of the Birmingham Smart City Alliance Steering Group
Back in September, we held the last meeting of the Birmingham Science City Digital Working Group – my first meeting as chair. We were joined by many enthusiastic representatives of Birmingham and the region’s digital community – entrepreneurs, small businesses, industry interest groups, universities and companies.
We had a thought provoking discussion of how the Digital Working Group can continue to be a valued forum and a catalyst for its members to share insight, create new ideas, and discover new opportunities in the digital economy; contributing to and benefitting from the Birmingham Science City objectives to create “scientific, technological and economic advantage for wealth, opportunity and worth”. In such a challenging economy, with funding for innovation and enterprise in short supply, such exchanges can stimulate new activity by increasing awareness of the resources that are nevertheless available.
The consensus we seemed to reach was that the working group could do that by:
- Bringing together stakeholders from our digital community who are aware of problems and challenges, and those who may be aware of solutions;
- Focussing on emerging opportunities for technology to contribute to Birmingham Science City’s economic and social objectives, but for which the business models are not yet clear;
- Using social media between meetings to explore specific topics within those broad criteria so that each face-to-face meeting has a clear agreed agenda beforehand;
- And continuing to use the group to provide updates between members, and in particular an update on current opportunities to access funds and resources.
As an example of the sorts of disruptive emerging technologies we might like to consider for our focuses, I found a couple of short videos interesting recently. The first, from the Financial Times, focuses on three small businesses in Shoreditch who are combining information technology, social media and advanced manufacturing in what the FT called “Industry 2.0”; a good example of the disruptive opportunities that are created when capabilities from different sectors are converged. The second is this presentation of an idea called “being nicely messy” presented by the Collaborative Research Initiatives Trust (CRIT) to the Audi Urban Future Awards 2012; the idea tries to capture the way in which innovation emerges in unexpected forms from Mumbai’s economy and physical environment as entrepreneurs search for gaps and opportunities in the market and use whatever resources are available to them to respond. The full report of the project is worth a read, and contains these excerpts:
“New patterns of work emerged as the new entrepreneurs struggled to survive and settle. they occupied varied locations and blurred the distinction between formality and informality …
… the entrepreneurs of Mumbai have innovatively occupied city spaces maximizing their efficiency …
… the blurry / messy condition further contributes to the high transactional capacity of the urban form.”
These remarks emphasise to me the need for us to be very open in considering where innovation and opportunity might emerge from; and what form it might take. The markets, business models and technologies we know today are in many cases unrecognisable from the world of only a few years ago; we should expect any and all of our assumptions to be challenged by the innovations that emerge in the very near future.
With these thoughts and provocations in mind, I’m thinking of organising the agenda of our next meeting, which will be in early December, around the following topics:
- Introduction and review of the last meeting
- Update on innovation investment and support
- An update on current trends in funding – e.g. from a local venture capitalist, or an update on tax credits for Research and Development from a Digital Working Group member
- An update on funding and projects from Birmingham Science City
- Introduction to the theme for the meeting
- An alternative viewpoint from Birmingham Science City – i.e. from somebody outside the usual Digital Working Group Community; and perhaps in this case from the Low Carbon Working Group, as discussed at our last meeting
- Creative discussion:
- How can Birmingham’s digital community exploit this theme, and how can the Digital Working Group help?
- Next steps, and discussion of the agenda for the next meeting
So what should our “theme” be?
In our last meeting we agreed that the area of Low Carbon technology was an interesting one for us to explore; and there are already interesting initiatives underway in that area in Birmingham, such as the “Birmingham Energy Savers” project, and the European Bio-Energy Research Institute, who are seeking to establish a regional supply chain of SMEs to support their work to develop small-scale, sustainable technology for recovering energy from waste food and sewage.
So my suggested theme is:
“How can the Birmingham Science City Digital Working Group create or stimulate innovation using digital technology to contribute to a low carbon economy – whether in the transport and energy sectors or elsewhere?”
If the Digital Working Group is able to do that, it could help Birmingham’s economy access the investment resources available to support low carbon innovation; potentially assisting in the creation of jobs, as well as lowering the city’s carbon footprint and improving its physical environment.
This discussion, in fact, reminds me of some important statements in Birmingham Science City’s Constitution; the constitution states that Birmingham Science City should stimulate collaborative innovation in using science and technology to create wealth, opportunity and worth by:
“Developing activities that increase public appreciation of the application of Science & Technology and the economic, employment and quality of life benefits that it can bring.”
“Encouraging collective maintenance and development of resources for innovation including finance and physical infrastructure.”
I’d like this suggestion to be the start of a discussion; hence I’m making it in this public forum, and posting links to it in several discussion groups on Linked-In as well as sending it to the Digital Working Group members by e-mail.
I look forward to hearing from the Digital Working Group members – or any other interested parties – for comments and feedback to my proposal for the next meeting.
(This article can also be found on my personal blog, theurbantechnologist.com, where I explore themes of emerging technology and Smarter Cities)
Many cities I work with are encouraging clusters of innovative, high-value, technology-based businesses to grow at the heart of their economies. They are looking to their Universities and technology partners to assist those clusters in identifying the emerging sciences and technologies that will disrupt existing industries and provide opportunities to break into new markets.
In advising customers and partners on this subject, I’ve found myself drawn to four themes. Each has the potential to cause significant disruptions, and to create opportunities that innovative businesses can exploit. Each one will also cause enormouse changes in our lives, and in the cities where most of us live and work.
The intelligent web
My colleague and friend Dr Phil Tetlow characterises the world wide web as the biggest socio-technical information-computing space that has ever been created; and he is not alone (I’ve paraphrased his words slightly, but I hope he’ll agree I’ve kept the spirit of them intact).
The sheer size and interconnected complexity of the web is remarkable. At the peak of “web 2.0” in 2007 more new information was created in one year than in the preceding 5000 years. More important, though, are the number and speed of transactions that are processed through the web as people and automated systems use it to exchange information, and to buy and sell products and services.
Larger-scale emergent phenomena are already resulting from this mass of interactions. They include universal patterns in the networks of links that form between webpages; and the fact that the informal collective activity of “tagging” links on social bookmarking sites tends to result in relatively stable vocabularies that describe the content of the pages that are linked to.
New such phenomena of increasing complexity and significance will emerge as the ability of computers to understand and process information in the forms in which it is used by humans grows; and as that ability is integrated into real-world systems. For example, the IBM “Watson” computer that competed successfully against the human champions of the television quiz show “Jeopardy” is now being used to help healthcare professionals identify candidate diagnoses based on massive volumes of research literature that they don’t have the time to read. Some investment funds now use automated engines to make investment decisions by analysing sentiments expressed on Twitter; and many people believe that self-driving cars will become the norm in the future following the award of a driving license to a Google computer by the State of Nevada.
As these astonishing advances become entwined with the growth in the volume and richness of information on the web, the effects will be profound and unpredictable. The new academic discipline of “Web Science” attempts to understand the emergent phenomena that might arise from a human-computer information processing system of such unprecedented scale. Many believe that our own intelligence emerges from complex information flows within the brain; some researchers in web science are considering the possibility that intelligence in some form might emerge from the web, or from systems like it.
That may seem a leap too far; and for now, it probably is. But as cities such as Birmingham, Sunderland and Dublin pursue the “open data” agenda and make progress towards the ideal of an “urban observatory“, the quantity, scope and richness of the data available on the web concerning city systems will increase many-fold. At the same time, the ability of intelligent agents such as Apple’s “Siri” smartphone technology, and social recommendation (or “decision support”) engines such as FourSquare will evolve too. Indeed, the domain of Smarter Cities is in large part concerned with the application of intelligent analytic software to data from city systems. Between the web of information and analytic technologies that are available now, and the possibilities for emergent artificial intelligence in the future, there lies a rich seam of opportunity for innovative individuals, businesses and communities to exploit the intelligent analysis of city data.
Things that make themselves
Can you imagine downloading designs for chocolate, training shoes and toys and then making them in your own home, whenever you like? What if you could do that for prosthetic limbs or even weapons?
3D printing makes all of this possible today. While 3D printers are still complex and expensive, they are rapidly becoming cheaper and easier to use. In time, more and more of us will own and use them. My one-time colleague Ian Hughes has long been an advocate; and Staffordshire University make their 3D printer available to businesses for prototyping and exploratory use.
Their spread will have profound consequences. Gun laws currently control weapons which are relatively large and need to be kept somewhere; and which leave a unique signature on each bullet they fire. But if guns can be “printed” from downloadable designs whenever they are required – and thrown away afterwards because they are so easy to replace – then forensics will rarely in future have the opportunity to match a bullet to a gun that has been fired before. Enforcement of gun ownership will require the restriction of access to digital descriptions of gun designs. The existing widespread piracy of music and films shows how hard it will be to do that.
3D printers, combined with technologies such as social media, smart materials, nano- and bio-technology and mass customisation, will create dramatic changes in the way that physical products are designed and manufactured – or even grown. For example CocoWorks, a collaboration involving Warwick University, uses a combination of social media and 3D printing to allow groups of friends to collectively design confectionery that they can then “print out” and eat.
These changes will have significant implications for city economies. The reduction in wage differentials between developed and emerging economies already means that in some cases it is more profitable to manufacture locally in rapid response to market demand than to manufacture globally at lowest cost. In the near-future technology advances will accelerate a convergence between the advanced manufacturing, design, communication and information technology industries that means that city economic strategies cannot afford to focus on any of them separately. Instead, they should look for new value at the evolving intersections between them.
Of mice, men and cyborgs
If the previous theme represents the convergence of the information world and products and materials in the physical world; then we should also consider convergence between the information world and living beings.
The “mouse” that defined computer usage from the 1980s through to the 2000s was the first widely successful innovation in human/computer interaction for decades; more recently, the touchscreen has once again made computing devices accessible or acceptable to new communities. I have seen many people who would never choose to use a laptop become inseparable from their iPads; and two-year-old children understand them instinctively. The world will change as these people interact with information in new ways.
More exciting human-computer interfaces are already here – Apple’s intelligent agent for smartphones, “Siri”; Birmingham City University’s MotivPro motion-capture and vibration suit; the Emotiv headset that measures thoughts and can interpret them; and Google’s augmented reality glasses.
Even these innovations have been surpassed by yet more intimate connections between ourselves and the information world. Professor Kevin Warwick at Reading University has pioneered the embedding of technology into the human body (his own body, to be precise) since 2002; and in the effort to create ever-smaller pilotless drone aircraft, control technology has been implanted into insects. There are immense ethical and legal challenges associated with these developments, of course. But it is certain that boundaries will crumble between the information that is processed on a silicon substrate; information that is processed by DNA; and the actions taken by living people and animals.
Historically, growth in Internet coverage and bandwidth and the progress of digitisation technology led to the disintermediation of value chains in industries such as retail, publishing and music. As evolving human/computer interfaces make it possible to digitise new aspects of experience and expression, we will see a continuing impact on the media, communication and information industries. But we will also see unexpected impacts on industries that we have assumed so far to be relatively immune to such disruptions: surgery, construction, waste management, landscape gardening and arbitration are a few that spring to mind as possibilities. (Google futurist Thomas Frey speculated along similar lines in his excellent article “55 Jobs of the Future“).
Early examples are already here, such as Paul Jenning’s work at Warwick University on the engineering of the emotional responses of drivers to the cars they are driving. Looking ahead, there is enormous scope amidst this convergence for the academic, entrepreneurial and technology partners within city ecosystems to collaborate to create valuable new ideas and businesses.
Civilisation has grown through the specialisation of trades and the diversification of economies. Urbanisation is defined in part by these concepts. They are made possible by the use of money, which provides an abstract quantification of the value of diverse goods and services.
However, we are increasingly questioning whether this quantification is complete and accurate, particularly in accounting for the impact of goods and services on the environments and societies in which they are made and delivered.
Historically, money replaced bartering, a negotiation of the comparative value of goods and services within an immediate personal context, as the means of quantifying transactions. The abstraction inherent in money dilutes some of the values central to the bartering process. The growing availability of alternatives to traditional bartering and money is making us more conscious of those shortcomings and trade-offs.
Social media, which enables us to make new connections and perform new transactions, combined with new technology-based local currencies and trading systems, offer the opportunity to extend our personalised concepts of value in space and time when negotiating exchanges; and to encourage transactions that improve communities and their environments.
It is by no means clear what effect these grass-roots innovations will have on the vast system of global finance; nor on the social and environmental impact of our activities. But examples are appearing everywhere; from the local, “values-led” banks making an impact in America; to the widespread phenomenon of social enterprise; to the Brixton and Bristol local currencies; and to Droplet, who are aiming to make Birmingham the first city with a mobile currency.
These local currency mechanisms have the ability to support marketplaces trading goods and services such as food, energy, transport, expertise and many of the other commodities vital to the functioning of city economies; and those marketplaces can be designed to promote local social and environmental priorities. They have an ability that we are only just beginning to explore to augment and accelerate existing innovations such as the business-to-consumer and business-to-business markets in sustainable food production operated by Big Barn and Sustaination; or what are so far simply community self-help networks such as Growing Birmingham.
As Smarter City infrastructures expose increasingly powerful and important capabilities to such enterprises – including the “civic hacking” movement – there is great potential for their innovations to contribute in significant ways to the sustainable growth and evolution of cities.
Some things never change
Despite these incredible changes, some things will stay the same. We will still travel to meet in person. We like to interact face-to-face where body language is clear and naturally understood, and where it’s pleasant to share food and drink. And the world will not be wholly equal. Humans are competitive, and human ingenuity will create things that are worth competing for. We will do so, sometimes fairly, sometimes not.
It’s also the case that predictions are usually wrong and futurologists are usually mistaken; so you have good cause to disregard everything you’ve just read.
But whether or not I have the details right, these trends are real, significant, and closer to the mainstream than we might expect. Somewhere in a city near you, entrepreneurs are starting new businesses based on them. Who knows which ones will succeed, and how?
Birmingham is making some great progress as a Smarter City this year, with announcements such as the City Deal; the launch of the Green Commission; and investments in ultra-fast broadband infrastructure. And the buzz is spreading. I was one of four speakers in the “Smart Cities” session at the recent Base Cities London conference. All four of us were involved in some form of “Smart” initiative in Birmingham; prompting one of the first questions at the subsequent panel debate to be: “Everyone seems to be working in Birmingham; will it be the world’s next Smart City?”. Of course, my answer was “Yes!”
(In fact, I was even cheekier. I claimed that Birmingham had invented the modern city. Citing the respected urbanist and economist Edward Glaeser I referred to the fact that Matthew Boulton’s commercialisation of James Watt’s uniquely efficient steam engine during the formative years of the Industrial Revolution was a fundamental innovation that led to cities being built “up” around elevators rather than “out” around horses and carts).
There are a variety of historic, scientific and contemporary sources that can inform Birmingham’s approach to reclaiming that role as a world-leading Smarter City innovator. I considered some of them this week in the following post taken from my personal blog, theurbantechnologist.com:
As I mentioned a couple of weeks ago, I recently read Geoffrey West’s fascinating paper on urban scaling laws, “Growth, innovation, scaling and the pace of life in cities“.
The paper applies to cities techniques that I recall from my Doctoral studies in the Physics and Engineering of Superconducting Devices for studying the emergent properties of self-organising complex systems.
Cities, being composed of 100,000s or millions of human beings with free-will who interact with each other, are clearly examples of such complex systems; and their emergent properties of interest include economic output, levels of crime, and expenditure on maintaining and expanding physical infrastructures.
It’s a less intimidating read than it might sound, and draws fascinating conclusions about the relationship between the size of city populations; their ability to create wealth through innovation; sustainability; and what many of us experience as the increasing speed of modern life.
I’m going to summarise the conclusions the paper draws about the characteristics and behaviour of cities; and then I’d like to challenge us to change them.
Professor West’s paper (which is also summarised in his excellent TED talk) uses empirical techniques to present fascinating insights into how cities have performed in our experience so far; but as I’ve argued before, such conclusions drawn from historic data do not rule out the possibility of cities achieving different levels of performance in the future by undertaking transformations.
That potential to transform city performance is vitally important in the light of West’s most fundamental finding: that the largest, densest cities currently create the most wealth most efficiently. History shows that the most successful models spread, and in this case that could lead us towards the higher end of predictions for the future growth of world population in a society dominated by larger and larger megacities supported by the systems I’ve described in the past as “extreme urbanism“.
I personally don’t find that an appealing vision for our future so I’m keen to pursue alternatives. (Note that Professor West is not advocating limitless city growth either; he’s simply analysing and reporting insights from the available data about cities, and doing it in an innovative and important way. I am absolutely not criticising his work; quite the oppostite – I’m inspired by it).
So here’s an unfairly brief summary of his findings:
- Quantitative measures of the creative performance of cities (such as wealth creation or the number of patents and inventions generated by city populations) – grow faster and faster the more that city size increases.
- Quantitative measures of the cost of city infrastructures grow more slowly as city size increases, because bigger cities can exploit economies of scale to grow more cheaply than smaller cities.
West found that these trends were incredibly consistent across cities of very different sizes. To explain the consistency, he drew an analogy with biology: for almost all animals, characteristics such as metabolic rate and life expectancy vary in a very predictable way according to the size of the animal.
The reason for this is that the performance of the thermodynamic, cardio-vascular and metabolic systems that support most animals in the same way are affected by size. For example, geometry determines that the surface area of small animals is larger compared to their body mass than that of large animals. So smaller animals lose heat through their skin more rapidly than larger animals. They therefore need faster metabolic systems that convert food to replacement heat more rapidly to keep them warm. This puts more pressure on their cardio-vascular systems and in particular their heart muscles, which beat more quickly and wear out sooner. So mice don’t live as long as elephants.
Further, more complex mechanisms are also involved, but they don’t contradict the idea that the emergent properties of biological systems are determined by the relationship between the scale of those systems and the performance of the processes that support them.
Professor West hypothesised that city systems such as transportation and utilities, as well as characteristics of the way that humans interact with each other, would similarly provide the underlying reasons for the urban scaling laws he observed.
Those systems are exactly what we need to affect if we are to change the relationship between city size and performance in the future. Whilst the cardio-vascular systems of animals are not something that animals can change, we absolutely can change the way that city systems behave – in the same way that as human beings we’ve extended our life expectancy through ingenuity in medicine and improvements in standards of living. This is precisely the idea behind Smarter cities.
The potential to do this is already apparent in West’s paper. In the graphs it presents that plot the performance of individual cities against the predictions of urban scaling laws, the performance of every city varies slightly from the law. Some cities outperform, and some underperform. That’s exactly what we should expect when comparing real data to an analysis of this sort. Whilst the importance of these variations in the context of West’s work is hotly contested, both in biology and in cities, personally I think they are crucial.
In my view, such variations suggest that the best way to interpret the urban scaling laws that Professor West discovered is as a challenge: they set the bar that cities should try to beat.
Cities everywhere are already exploring innovative, sustainable ways to create improvements in the performance of their social, economic and environmental systems. Examples include:
- Programmes that exploit analytic technologies to speed up convergence and innovation across sectors in city economies.
- Engaging individuals, communities and utility providers in the more sustainable use of resources such as energy and water; as Dubuque and Malta have done.
- Encouraging the use of social technologies to increase the rate of interactions which create and exchange value, both in virtual environments and in the real world.
- Exploiting information platforms that provide city stakeholders with more accurate insight into the behaviour of city systems, and consequently with opportunities to create innovative ways to change them; as Dublin are doing.
- Creating local trading systems that encourage the growth of economic activity with local social and environmental benefits.
- Using information and analytics to create more efficient transportation systems that connect people more effectively with each other whilst reducing environmental impact, increasing life expectancy and removing barriers to economic productivity; as Singapore, California and Stockholm are doing.
- Reducing crime rates by using analytics to inform the planning and operations of public safety agencies, as Memphis and Northern Ireland have done, with impressive results.
In all of those cases, cities have used technology effectively to disrupt and transform the behaviour of urban systems. They have all lifted at least some elements of performance above the bar set by urban scaling laws. There are many more examples in cities across the world. In fact, this process has been taking place continuously for as long as cities have existed – as was described recently in a Centre for Cities report on the development and performance of cities in the UK throughout the 20th Century.
(That report contains a specific challenge for Birmingham, by the way. It shows that in the first part of the 20th Century, Birmingham outperformed many UK cities and became prosperous and successful because of the diversity of its industries – famously expressed as the “city of a thousand trades”. In the latter part of the Century, however, as Birmingham became more dependent on an automotive industry that subsequently declined, the city lost a lot of ground. So the great steps that we are beginning to take here are vitally important in order to re-create a more vibrant, diverse, innovative and successful economy).
As cities everywhere emulate successful innovations, though, they will of course reset the bar of expected performance. Cities that wish to consistently outperform others will need to constantly generate new innovations.
This is where I’ll bring in another idea from physics – the concept of a phase change. A phase change occurs when a system passes a tipping point and suddenly switches from one type of behaviour to another. This is what happens when the temperature of water in a kettle rises from 98 to 99 to 100 degrees Centigrade and water – which is heavy and stays in the bottom of the kettle – changes to steam – which is light and rises out of the kettle’s spout. The “phase change” in this example is the transformation of a volume of water from a liquid to a gas through the process of boiling.
So the big question is: as we change the way that city systems behave, will we eventually encounter a phase change that breaks West’s fundamental finding that the largest cities create the most value most efficiently? For example, will we find new technologies for communication and collaboration that enable networks of people spread across thousands of miles of countryside or ocean to be as efficiently creative as the dense networks of people living in megacities?
I certainly hope so; because unless we can break the link between the size and the success of cities, I worry that the trend towards larger and larger cities and increasing global population will continue and eventually reach levels that will be difficult or impossible to maintain. West apparently agrees; in an interview with the New York Times, which provides an excellent review of his work, he stated that “The only thing that stops the superlinear equations is when we run out of something we need. And so the growth slows down. If nothing else changes, the system will eventually start to collapse.”
But I’m an optimist; so I look forward to the amazing innovations we’re all going to create that will break the laws of urban scaling and offer us a more attractive and sustainable future. It’s incredibly important that we find them.
There’s been a distinct change recently in how we describe what a “Smarter City” is. Whereas in the past we’ve focused on the capabilities of technology to make city systems more intelligent, we’re now looking to marketplace economics to describe the defining characteristics of Smarter City behaviour.
The link between the two views is the ability of emerging technology platforms to enable the formation of new marketplaces which make possible new exchanges of resources, information and value. Historically, growth in Internet coverage and bandwidth led to the disintermediation of value chains in industries such as retail, publishing and music. Soon we will see technologies that connect information with the physical world in more intimate ways cause disruptions in industries such as food supply, manufacturing and healthcare.
There are two reasons we’ve switched focus from a technology to an economic perspective of Smarter Cities. The first is that these new marketplaces are the way to make both public service delivery and economic growth within cities sustainable. The second is that it’s only by examining the money flows within them that we can identify the revenue streams that will fund the construction and operation of their supporting technology platforms.
The importance of driving sustainable, equitably distributed recovery to economic growth from the current financial crisis was championed by Christine Lagarde, the Managing Director of the International Monetary Fund, in her speech ahead of the Rio +20 Summit. She emphasised the role of stability in enabling such a recovery. Instability is change, and managing change consumes resources. So stable systems – or stable cities – consume less resources than unstable ones. And they’re much more comfortable places to live.
This concept explains a shift in the economic strategy of some cities and nations. In recent decades cities have used Foreign Direct Investment (FDI) tools such as tax breaks to incent existing businesses to relocate to their economies. When cities such as Sunderland and Birmingham lost 10%-25% of their jobs in less than two decades in the 1980’s and 1990’s, FDI provided the emergency fix that brought in new jobs in call centres, financial services and manufacturing.
But businesses that find it possible and cost-effective to relocate for these reasons can and do relocate again when more attractive incentives are offered elsewhere. So they tend to integrate relatively shallowly in local economies – retaining their existing globalised supply chains, for example. When they move on, they cause expensive, socially damaging instabilities in the cities they leave behind.
The new focus is on sustainable, organic economic growth driven by SMEs in locally re-inforcing clusters. By building clusters of companies providing related products and services with strong input/output linkages, cities can create economies that are more deeply rooted in their locality. Examples include the cluster of wireless technology companies in Cambridge with strong ties to the local university; or Birmingham’s Jewellery Quarter, an incredibly dense cluster of designers, manufacturers and retailers who work with Birmingham City University’s School of Jewellery and Horology and their Jewellery Innovation Centre. Many cities I work with are focussing their economic development resources on clusters in the specific industry sectors where they can demonstrate unique strength.
In order to succeed, such clusters need access to transactional marketplaces for trading with each other; and for winning business in local, national and international markets. The disruptive, disintermediating capabilities of Smarter City technologies could help such marketplaces to work more quickly, at lower cost; to extend the market reach of their members; to find new innovations through discovering synergies across traditional industry sectors; or to support the formation of innovative business models that recognise and capitalise social and environmental value. These marketplaces are also exactly what’s needed to support the transformation to open public services.
Marketplaces need infrastructure. In traditional terms, that infrastructure might have consisted – in the case of my local cattle market in Kidderminster say – of a physical building; a hinterland connected by transport routes; a governing authority; a system of payments; and a means of determining the quality and value of goods and services to be exchanged. Smarter City markets are no different. They may be based on technology platforms rather than in buildings; but they need governance, identity and reputation management, payment systems and other supporting services. The implementation and operation of those infrastructure capabilities has a significant cost.
This is where large and small organisations need to partner to deliver meaningful innovation in Smarter Cities. The resources of larger organisations – whether they are national governments, local councils, transport providers, employers or technology vendors – are required to underwrite infrastructure investments on the basis of future financial returns in the form of commercial revenues or tax receipts. But innovations in the delivery of value to local communities are likely to be created by small, agile organisations deeply embedded in those communities. An example where this is already happening is in Dublin, where entrepreneurial organisations are using the city’s open data portal to develop new business models that are winning venture capital backing.
In order to replicate at scale what’s happening in Dublin and Sunderland, we need to define the open standards through which agile “Apps” developed by local innovators can access the capabilities of new marketplace infrastructures. Those standards need to be associated with financial models that balance affordability for citizens, communities and entrepreneurial businesses with the cost of operating resilient infrastructures.
If we can get that balance right, then stakeholders across city systems everywhere could work more effectively together to deliver Smarter City solutions that really address the big survival challenges facing us: reliable systems that everyone can use across the rich diversity of our cities, communities and citizens.
I hope that I can help the Birmingham Science City Digital Working Group contribute to Birmingham’s Smarter City agenda by exploiting the ideas I’ve discussed in this post. One very concrete way we could do that is by holding co-creation events with local stakeholders to discuss how new technologies might disrupt industry sectors in which Birmingham has a strong capability already. I’d like to discuss how we might do that at the next Working Group meeting on Wednesday 19th September. Perhaps I’ll see you there.