More of us are living in cities. And the trend is set to rise dramatically over the next few decades. The global urban population is already 4.2 billion strong. By 2050, United Nations estimates suggest that it will reach 6.7 billion people. Cities with more than 10 million inhabitants (‘megacities’) are expected to surge. In 2014, the United Nations counted 28 megacities. By 2030, that total will have risen to more than 40.
Of course, it’s not just the rapid increase in city size that creates challenges. Cities themselves are exposed to a number of risks that urban planners urgently need to take into account. These include extreme weather events and rises in sea levels. Cities in coastal areas account for 40 percent of global urban settlements. How will they counter this threat and what will it mean for residents?
Take another example: traffic congestion. In the US, the world’s most congested developed country, drivers spend 41 hours a year, on average, in traffic during peak hours. That cost them almost $305 billion in 2017 ($1,445 per driver). Or take another: greenhouse gas emissions. Cities already consume over two-thirds of the world’s energy and account for more than 70% of global CO2 emissions. What happens when urban populations double? These are just two examples of the many challenges facing all urban areas today. The only thing that’s certain is that the challenges will keep on coming.
To address them, all cities will need to transform. Demand is not simply driven by the influx of new city dwellers but also by the growing and changing service demands of existing citizens. They increasingly bring expectations from their best digital experiences – from Amazon to Uber – to their interactions with public services. That means cities and public services must change to meet these new demands.
Innovation will be the fuel that powers transformation. But, there’s a problem. Talk to most city leaders today and while they are all too aware of the problems they frequently cite barriers including some or all of: a lack of resources, uncertain returns (over one-third of cities that are on this journey cite uncertain ROI as key obstacle), too few people with the right skills and capabilities and a rapidly-revolving budget/political cycle at odds with the long-term nature of the projects they need to operate to make their cities ready for 2050. Even where funding can be secured, most if not all cities will lack the expertise needed to evaluate and select from the range of possible technical solutions on offer.
There’s no question that all this is a massive challenge. Cities are one of the most wonderfully interesting, but complex, human creations of all time. They are amalgams of hundreds, if not thousands, of systems, both physical and digital. They are unwieldy, highly segmented and as a result typically very inefficient. Coordinating innovation across all this complexity is an enormous undertaking. It’s little wonder that so many cities find themselves in a kind of perpetual limbo, constantly launching new pilots but unable to scale these through to long-term strategic implementation.
So, given the challenges cities face, how can they transform in the right ways to meet the ever-increasing demands and expectations of their residents? They need a different approach. And they need it soon.
That’s what we have developed with a number of cities in North America. By assembling the optimal mix of resources, know-how and skills from across the public and private sector – and coordinating via a long-term project structure, we are opening the way for cities to deliver the transformation they need to make, while overcoming the formidable hurdles that typically confront them on that journey.
Just like a business, every city needs to see this as a journey that extends into all aspects of how they operate and organize today. While some of the use-cases for innovation promise futuristic capabilities and services, they won’t be delivered unless existing civic infrastructures – both physical and technological – are modernized. In other words, you can’t build the future on creaking foundations.
The keystone for a successful smart city? Smart governance, with a cohesive implementation plan that can deliver results as efficiently as possible. With that in place, success hinges on a number of factors. Priorities include the need for new funding mechanisms. As things stand, most cities just don’t have the resources to pay for smart city solutions themselves. New sources of capital are urgently required. Cities recognize this: over 65 percent identify public/private partnerships as the key to financing three years from now.
Another priority? Identifying the right partners that can shape and deliver the innovative projects that cities need to become fit for the 21st Century. We know smart city leaders draw on a wide range of internal/external approaches: over half of them outsource implementation to consultants and/or partner with technology providers.
Doing that is likely to require a vendor-agnostic, deeply experienced trusted advisor that can assemble the optimal consortium of lenders, service providers, engineers, designers, research bodies and technologists to get innovation off the ground at scale.
These consortia might include the large civil-infrastructure organizations that have amassed enormous specialist experience across projects ranging from airports to transport and utilities. With billions of dollars to invest, they’re looking for the right robust use cases that will provide them with long-term ROI. Cities should be in their sweet-spot. But to take advantage, it’s the cities themselves that need to embrace a new mindset and approach.