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Cities are being disrupted… who will win?

CitiesMore than ever before, cities need to draw on contemporary lessons from the business community to help them navigate an increasingly complex future.

Companies that grow over time often suffer from a deep embedded conservatism . They do things “Because that’s the way we’ve always done them around here…” Consequently, the business world is littered with failures. But there are also examples of stellar success. The question for our cities is: “Which do you want to be?”

In so many ways, cities can be seen in the same light as companies. Like companies, they face enormous challenges (and opportunities) brought about by a digital future. Fast forward 20 years, and all of us will want to live in what’s being termed ‘smart cities’.

Getting to this future, however, is proving to be a challenge. City leadership will need to learn lessons from businesses that have dramatically failed if they have any hope of creating a better future…

A famous example of crippling conservatism in the business market was Kodak. Ironically, it was Kodak who invented the digital camera, yet tragically they were declared bankrupt and forced to close their doors. What were they missing? As the phenomenon of collecting memories in real-time grew, and alongside this the ability to edit and share these memories, so did the plethora of companies who were clever enough to focus on meaning, and not technology, for breakthrough success. Kodak hired teams of industry analysts who all told them that digital photography was the future – but they fired them, and others to follow.

‘Disruptors’ such as the digital camera have been with us since the beginning of time. The horse and carriage was replaced by the motor vehicle; the mainframe computer by the PC; and Blockbuster by Netflix. What is new is the pace of change we’re encountering today.

CitiesSmart businesses are realising that this ‘disruption’ poses a risk to their success; and they’re continually renewing their response and resilience on an on-going basis. Smart cities should be doing the same! Our cities today are too often a myriad of small councils who can rarely agree; or one large council who has its focus fixed on the here and now. Do they have the right strategic or visionary mind-set to make the big decisions that are needed to achieve a smart city state? How can a multiplicity of councils truly plan for autonomous vehicles or smart power networks or artificial intelligence in everything?

In business, a proven methodology for success involves a deep understanding of the three risk horizons: identifiable risks; strategic risk; and emergent risk. City fathers should ignore this at their peril.

Most organisations are cognisant of identifiable, or immediate, risks and address these as part of a ‘business-as-usual’ approach. More evolved organisations develop strategies for overcoming risks that might impact them in the future; thereby creating competitive advantage over a longer period of time. Most organisations, however, fail to consider emergent risks. These are the obliques – the exponential technologies and things that are outside of their range of contemplation. Like Kodak, they fail to see the new disruptive influence and they fail to let go of the old in order to let in the new.

Climatic zones are shifting and if they do; will entire farmlands need to be relocated? Would city planners ever let go of their current location in favour of reconstructing elsewhere in a new, better location? Ocean levels are changing and different rain patterns are evolving and if they do, how will this influence the manner in which cities grow? More importantly, what are the consequences of ignoring these risks?

Strategic planning at a city level will create an advantage whereby one city ‘succeeds’ by comparison to others. The first city to truly adopt digital will become a magnet for industries and, as a result, a magnet for prosperity and liveability.

Cities should not be run in the here and now . They should be run as elite business entities and follow a blueprint for success. Unless they are actively identifying emergent risks and strategising for long term growth by seeking to create competitive advantage – they are, possibly, heading for a Kodak moment.

19 replies »

  1. Great blog Matt. It was suggested to me last week by someone at an international conference that the best cities in the world have been built by dictators. I am sure that’s not want you are suggesting is needed. But it does go to the need for cities to be strategic, forward thinking AND have the ability to make change happen.

    • Astute point. I reckon this is because democracies are prone to short termism, driven by the election cycle, where as dictators can rely on a longer term to implement strategy. South koreas development under a benign dictatorship is a good case in point.

  2. Cities are like children. They grow and develop under the guidance of parents and family (who have differing views on how they should develop); they have individual personalities and over time take fewer and fewer cues from those that guide them.

    Cities are organic and grow and develop as the needs of people and economies ebb and flow. Their growth depends mainly on private finance seeking a return on investment, and hence the market has a significant role.
    Of course we try to put a planning overlay on cities, but often these are static and the authorities lack the agility to amend these to suit changing requirements.

    As Susie hints in her comment, this is democracy in action!

    What I like to see for a city is an overarching vision, or “winning aspiration” such as Auckland’s “Most liveable city”.

    Of course, while Kodak may have ceased to exist as there were alternatives to their products, for cities to suffer a Kodak moment as suggested, implies that people will desert cities and become rural dwellers again. It would be like watching the development of China over the past 30 years in rewind mode.

  3. Excellent piece Matt. A quote attributed to Henry Ford was “if I asked people what they wanted they would have said faster horses” captures the sentiment that we have always done it this way. What we need is city leaders to tell and show us what is possible (the strategy) and then lead us through the process of change to make those possibilities real.

    • Thanks Eric. Your point is about the importance of the appropriate level of vision, leadership and governance in city development. I agree completely and you may look at the reply I gave to Dan’s comment, as it discusses that topic in a bit more detail. Another related point to consider, however, is the extent to which we can capture inputs of stakeholders, so that they indeed become co-designers (and you could even see them as contributors to a “distributed leadership” model) of the vision, the strategy and the solution. And as an aside when I refer to stakeholders here, it captures a broad sweep of groups, including local communities of course, but also potential investors, skilled workers considering relocating, politicians, businesses etc. I am a supporter of such participatory visioning and design.

  4. What I think is a great example of disruption for transport in cities – and not due to technology advancement – is the news that cycle traffic into central London is set to exceed car traffic within the next couple of years, albeit partly driven by legislation. This has the potential to hugely change the way our cities are designed around multi lane vehicle access ways for more sustainable transport options and more liveable spaces.

  5. Very interesting post! Given the influence of digitalisation and the drive to reduce negative environmental impacts, future cities could be very different places to what they are now. More people working flexibly or from home could mean no future peak hour! Will we then we need the the same extent of road infrastructure that we have now to meet peak demand? Cafes or libraries could replace traditional office space and green spaces could be used for a wider variety of purposes such as business, training or education. A forward thinking and coordinated leadership would consider whether we are building and investing for the past/present or the future and whether the community will see a return on the investment.

    • Thanks Jessica. Yes, that really is the point of the article. The city of the future could be driven by quite different factors (ie could be disrupted) and those cities which are best at, firstly, seeing the disruption coming, secondly, recognising what actions need to be taken to respond and, thirdly, are most efficient at implementing those actions, will be best positioned to attract residents and investors..

  6. Good article.

    I recently joined Kate Wickett in a workshop with Deloitte to discuss a smart cities strategy for Parramatta. One of the key things I drew from the workshop was that the smartest people in the cities most likely won’t be the councillors. Not a criticism – just that they represent such a small percentage of the population.

    The smartest people will be out there in the general community and the business community. Perhaps the smart cities will be the ones who know how do you draw on the creativity, ingenuity, knowledge and experience within that community.

    The key term for me was ‘enable’. Councils can’t do everything. Better to somehow create a framework that enables and encourages individuals or groups to implement great ideas that fit within a broader strategy. These could be for profit or not-for-profit. They could also be initiatives that don’t cost the council a cent!

    A great example (tho for a State rather than Local government) is TripView, an app created by a private developer to help commuters track the buses and trains they are waiting for in real time. Incredibly at the time, the NSW state government, rather than embracing it, actually tried to shut it down (dumb city award awaiting!!). Thankfully common sense prevailed and it has now been embraced. Ref: http://www.afr.com/it-pro/nsw-government-applauds-tripview-app-developer-three-years-after-sue-threat-20130411-jz244

    Smart Cities don’t miss things like this. They encourage and nurture. They proactively ‘enable’.

    • Thanks Rick. I will shortly be releasing another post in this series, which will look at exactly this concept, and particularly how technology can be used to leverage the insight from stakeholders to assist in co-designing precincts, cities and individual assets. There is a movement around what is being called civic technology, where communities digitally “comment” on proposed developments either directly (by posting a comment pinned to a location, for instance) or in the background (by allowing their movements to be tracked), and the data is gathered and analysed, and then incorporated into the design solution. What is interesting, and useful, about that is how well it aligns with the customer experience focus within design led innovation. If we consider the community to be the customer, and we incorporate their positive and negative experiences into the design solutions, are we not getting the most user-appropriate design outcome?

  7. by 2100 many coastal cities will need to have dealt with rising sea levels; while many regional towns are likely to become ghost towns due to drought. Having a vision of the future and a strategic plan and persuading others to see and act along with you, is the biggest challenge. Few are able to pull this off, and yet many lives will be affected if action is not taken now.

    • You’re absolutely right, of course, Dan in that the ability to firstly see the changes coming and then have the strength of leadership (or an appropriately agile and representative governance structure) to develop and implement the necessary responses (quickly!), is a key factor. In another post in this series I will be examining the whole issue of the role of governance and leadership as one of the key factors in ensuring that cities respond to disruptors. It is often the issue that is either ignored, or very poorly dealt with, in the development of contemporary and agile urban solutions.

  8. Cities are in competition with each other for talent and skills. I am fairly sure that I disagree with cities needing to “be run as elite business entities”, but definitely agree with actively identifying risks and being flexible to change plans as the black swan events and disruptors emerge.

    • Thanks Matt. Yes, the comparison doesn’t necessarily play out perfectly across all situations, but you have picked up on the key messages – cities compete for talent and investment and those which are best at recognising and responding to the disruptors (be those social, economic, physical or technological) will likely win. The comparison to businesses is useful in illustrating how easy it is to ignore the coming change even when, with the benefit of hindsight, it is so self-evident as to almost be embarrassing.

  9. Hi Matt, I read your article “Cities are being disrupted – who will win” because a mutual contact (Stuart Cassie) recommended it on Linked In. I happen to have unlimited Wi-Fi in the city I live so it was easy and “free” for me to read it and I am interested in the topic.

    The forces that drove me to read your article are the same forces a city should tap into if it is to win.

    I believe the answer to your question is: The most liveable city will win

    PS: I don’t live in Auckland it’s just a cool slogan

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