Smart cities need smart governments: 5 places to start
The following is an excerpt from the McKinsey Global Institute report, Smart cities: Digital solutions for a more livable future.
The progress that can be achieved with each smart city application depends on the economic, geographic, and social features of the setting where it is used. Yet there’s another determining factor: good management. Technology is only as effective as the entity that puts it to work.
Some cities start with inherent advantages such as wealth, density, or existing high-tech industries. But even places that lack these ingredients can set themselves apart with vision, good management, a willingness to break with conventional ways of doing things, and a relentless commitment to meeting the needs of residents. Today many cities are conducting interesting experiments but still tinkering at the margins.
Using technology to transform urban environments in a more meaningful way will require new thinking, particularly in these five areas.
1. Combine smart planning with asset development to get the most out of the system
Smart city technologies help cities get more out of their assets, whether they have extensive legacy systems or are building from scratch. There is no getting around the need to invest in physical assets and maintenance, but smart technologies can add new capabilities as core components are upgraded.
Infrastructure investment once locked cities into capital-intensive and extremely long-term plans based on a static snapshot of how they expected demand to evolve. Now, using the right combination of traditional construction and smart solutions, they can respond more dynamically to how demand is changing. Governments can make more flexible, data-driven investments with shorter planning cycles. If population growth surges in a far-flung neighborhood, adding a new subway or bus line with the accompanying fleet expansion may take years. By contrast, a privately operated on-demand minibus service could be up and running much faster.
Smart city applications become more effective when paired with low-tech measures and complementary policy moves. Reducing private car use is a priority in Seoul, for example. In addition to implementing smart mobility solutions, the city is reallocating street lanes to pedestrians and bicycles, and strictly limiting parking spots in new public buildings.
2. Embrace an open approach to support innovation and private sector participation
City government does not have to be the sole funder and operator of every type of service and infrastructure system. While implementing most of the applications we examined would fall to the public sector, the majority of the initial investment could come from private actors (see exhibit). Public financing may be reserved for only those public goods that must be provided by the government. Furthermore, more than half of the initial investment that needs to be made by the public sector would generate a positive financial return, which opens the door to partnerships.
It makes sense to identify areas where city agencies can step back and make room for private-sector companies, state-owned utilities, universities, foundations, and nonprofits to play a role. Adding more actors to the mix is a positive, since it increases adoption and applies more creativity to the available data. Cash-strapped municipal governments may need to enlist multiple partners, but the natural owner should add value such as expertise and capabilities, not just capital.
When private-sector innovations spring up organically, the role of government may involve regulating, convening key actors, offering subsidies, or changing purchasing decisions. Rather than taking a master-planning approach, some cities position themselves as ecosystems, creating consortia and even physical collaboration spaces. Amsterdam Smart City, for example, is a public-private partnership that brings together municipal agencies, educational institutions, nonprofits, private-sector companies, and startups.
3. Put people at the center of everything, and use technology to unite the city
Technology can change the relationship between municipal governments and the people they serve. Constituents can engage in two-way conversations with public officials and agencies via social media and interactive mobile apps. Cities can use technology to take the pulse of public opinion on a wide range of issues, using public feedback as the basis for making continuous improvements to the system. To that end, smart city efforts need to be transparent and accountable to the public. Engaging residents from the outset, not just after specific applications suddenly appear, can secure community buy-in.
Smart cities also raise questions of equity. Most (though not all) applications require smartphones or work best with them, so bringing more of the population online is a priority. The needs of all demographics and neighborhoods should be on the agenda when cities choose which programs to pursue. There is an exciting opportunity to use technology to serve aging populations, for example. Cities such as Singapore and Tokyo are using applications such as remote patient monitoring and telemedicine to help seniors age at home.
Technology may have the potential to be alienating, but cities can turn that on its head by actively looking for ways to use it in the service of building real-world community and personal connection. They may be able to use social networks to facilitate volunteering, mentoring, parenting support, and community activities on a much wider scale, for example.
4. Add the skills and create the latitude to innovate across city agencies
Getting smart doesn’t happen by itself. Cities need to give their agencies the leeway to innovate. Adding civic tech talent, at least in selective areas, is a top priority for municipal governments. Even if they rely on external providers, they have to be able to understand and direct the programs in detail. Many places have started by adding new roles such as chief digital officer or establishing cross-disciplinary smart city units. Boston, for example, has established an analytics unit, while Chicago has built a data science team. Over time, however, the effort to become smart must permeate every aspect of government.
In a digital world, city agencies need the latitude to make bolder decisions and to experiment, learn, and recalibrate. Smart cities such as Copenhagen approach that challenge by testing applications in pilot districts or living laboratories. In Kigali, Vision City is a tech-enabled district with free Wi-Fi, solar-powered streetlights and mobile networks, and new housing units complete with automation systems.
5. Get cybersmart to address privacy and security risks
Increased surveillance and data-driven policing raise concerns about “big brother” always watching and the potential to inhibit political dissent. Governments and private-sector players now hold and share sensitive personal data, making it critical to establish thoughtful protocols and safeguards about its handling and protection.
Experts worldwide are concerned about cybersecurity vulnerabilities in smart cities. The Internet of Things provides extensive “surface area” for hackers to attack. Compromised security systems, medical monitors, and self-driving cars could pose life-and-death risks, and the consequences could be severe if bad actors shut down a city’s power grid or water supply. Cities need to prioritize their most sensitive assets and surround them with the most rigorous defense mechanisms. Mission-critical IoT applications should have high levels of security before they are adopted on a large scale.
Cities will have to develop cybersecurity expertise, and stay abreast of the constantly evolving threat environment. They will need to prepare for how to respond to breaches — including not only technical remediation but how they will maintain calm and how they will communicate. IoT firms and mobile app developers must prioritize cybersecurity at every stage rather than patching safeguards onto completed tools after the fact.
Becoming a smart city is not a goal but a means to an end.
Making a city smart requires all hands on deck: city leadership and public employees, private-sector companies, and residents of all ages and from all neighborhoods.
Digital solutions are only one part of the full tool kit for making a city great. But they are the most powerful and cost-effective additions to that tool kit in many years. Smart technologies on their own cannot solve all the bad planning of the past, severe housing shortages, or the absence of fundamental infrastructure and essential services. Yet if they are deployed along with forward-looking policies, thoughtful urban planning, and investment in traditional infrastructure, cities could begin to dent problems that once seemed intractable.
