Transformative portfolio-based approaches for urban transition governance: Insights from the recent City Lab workshop
By Kateryna Pereverza with contributions from Olle Dierks and Elina Järvelä
In this article, we sum up insights from the City Lab Workshop about the novel “beyond projectification” governance strategy — transformative portfolio-based approaches (TPAs). The workshop was held on the 6th of October 2022 as part of the series established by Viable Cities as a platform for in-depth exploration of various topics that are of interest and urgency for Swedish cities to learn about when pursuing the ambitious goals of climate-neutrality by 2030. Kateryna designed the workshop based on a study in which she followed the evolution of the discourse and practice of TPAs in intermediary and innovation policy actors in Sweden and globally. Two guest speakers — Elina Järvelä from UNDP and Olle Dierks from Viable Cities — joined the workshop and shared their perspectives on TPAs and how they worked out so far in the first pilots in cities. The conversation unfolded around three themes: (1) the emerging toolboxes of TPAs, (2) the actors’ roles and capacities needed to implement TPAs, and (3) the ways to finance transformative portfolios. The workshop was recorded and can be watched on the Viable Cities YouTube channel.
Why this focus?
There is a growing expectation that cities are places where transitions to climate-neutrality and high quality of life should and can happen. To make it possible, missions formulated on the strategic level have to be translated into operational (climate) actions. While the transformative potential of these actions will define the success in achieving the mission. But how to ensure such a transformative potential in the collective actions of various urban actors? And what about the multitude of experiments, projects, and activities that are already ongoing or planned in cities? How can they be taken on board for learning and devising more impactful interventions? Or how to find synergies and start seeing separate projects as parts of a process that should ultimately lead to the achievement of the mission?
To address questions like these, several frontrunner actors started developing the concept and later launched the first pilots of transformative portfolio-based approaches (TPAs). In this 2 hour-long workshop, we invited representatives of such frontrunner actors to share their learnings and insights. Elina Järvelä, the strategic designer at UNDP, was involved in the conceptualisation of TPAs and is currently working on more than 10 pilots in cities of Western Balkans and Eastern and Central Europe. Olle Dierks, a former portfolio strategist and currently a manager for large-scale investments at Viable Cities, participated in the conceptualisation of TPAs and piloted the design of four system demonstrators within the international Climate Smart Cities Challenge. Both speakers provided insightful contributions to the workshop. At the beginning of the workshop, I briefly introduced how portfolio thinking emerged as an answer to the challenge of “projectification” in the transition governance context and shared several metaphors that accentuated the emerging features of TPAs as a systemic governance strategy for urban transitions.
The phenomenon of projectification in transition governance
Projectification is defined as “a growing reliance on projects and project management techniques to structure activity” (Hodgson et al., 2019). Recent research highlights that projects proliferated in all areas of society and became a dominant form for organising activities. On one hand, projects are flexible, goal-oriented and in a way practical organisational form which explains why they became so popular. On the other hand, when projects became almost the only organisational form, issues started to arise.
Projectification appears particularly counterproductive in the context of urban transition governance. For example, in their recent article Jonas Torrens and Timo von Wirth (2021) have shown how transition experiments become projectified leading to, using their words, “the short-termism and unambitious incrementalism”. Another study by Damian Hodgson and co-authors (2019) highlighted a reinforcing loop that emerges between the projectification of the funding system and activities.
These and other observations by transition scholars and practitioners sparked the wave of interest in “beyond projectification” approaches. Portfolio thinking quickly came into focus as a known idea from the neighbouring fields of project management, innovation management and finance. Though, this didn’t lead to the transfer of “portfolio theories” from these fields into transition governance but rather inspired the development of authentic portfolio-based approaches relevant to the complex and uncertain context of urban transitions.
Perspectives of the workshop participants
One goal of the workshop was to explore the perspectives of its participants on portfolio thinking before introducing those of the guest speakers. Interestingly, this revealed that many participants (most of whom are working in Swedish municipalities) have heard about portfolio thinking and portfolio-based approaches before but rarely use them in their own practice.
We also learned that innovation management and transition governance are two main fields from which participants draw their knowledge of portfolio thinking. Surprisingly few have encountered it in project management. And no one chose the fields of finance or design.
Finally, we build a word cloud with associations participants have when it comes to the features of portfolio-based approaches. Such keywords as “mission” and “direction” appeared most often.
From metaphors to the first pilot of TPAs in cities
Associations and metaphors played important roles in the evolution of TPAs as a concept, both fostering creativity and helping in the communication of new ideas. This is not surprising, since we often use metaphors to explain something new or unfamiliar to others. With this, we can be looking for common ground or trying to express complex ideas in simpler terms. During the workshop, I presented several metaphors I spotted in the discussions about TPAs I followed or been a part of during the last three years.
One metaphor often used in the Viable Cities events describes a transformative portfolio as a “snowball” in comparison to the “snowflakes” of fragmented projects or disconnected interventions. It also has another dimension of meaning, related to directionality and accumulation of a critical mass to create a more significant impact. Another metaphor, expressed by Dan Hill in the times of his work in Vinnova, looks at a portfolio as a glue, highlighting the essential role of connections between elements in a portfolio. In his presentations, Giulio Quaggiotto from UNDP used the funnelling (i.e. selectivity) vs layering (i.e. options of different nature can be a part of the same portfolio) metaphor to explain what the logic of a portfolio composition can be. In international discussions around TPAs, the confetti vs spaghetti metaphor was popular to point up the need for synergies and interconnections between activities within a portfolio. Lastly, both UNDP and Viable Cities used to talk about portfolio-based approaches as those based on learning suggesting the iterative nature of TPAs and the importance of continuous adaptation based on learning from interventions in a portfolio. Interestingly, the last metaphor “talks” about the activity/process of TPAs, while all others rather address a transformative portfolio (TP) as a constellation of elements.
With time, the conceptual discussions about TPAs led to the creation of their toolboxes and the first pilots of TPAs in cities. National and transnational intermediaries and policy actors played an important role in advancing TPAs. It was exactly these actors who initiated collaborations with local and national governments and launched pilots of TPAs in cities. For example, the Strategic Innovation Unit of UNDP partnered with international consultancies Chôra Foundation and ALC to pilot TPAs in cities and countries of Eastern Europe, South-East Asia, Africa and Latin America. Among many outcomes, this also resulted in the first Guidebook for Adopting Portfolio Approaches being published in 2022. Another international actor, OECD Observatory of Public Sector Innovations (OECD OPSI) put forward the “innovation facets model” which can be used for sensemaking with regard to a composition of an innovation portfolio. With the broadening of the idea of “innovations” and the growing focus on innovations in collaborative contexts, approaches developed by OPSI are also relevant for TPAs. Climate KIC launched a deep demonstrations initiative to support system innovations in cities by providing relevant methodologies and expertise. Recently Viable Cities and Vinnova created a call for the design phase of system demonstrators to support cities in their transformative efforts. Dark Matter Labs, UN-Habitat and Viable Cities collaborated to design system demonstrators as part of the Climate Smart Cities Challenge (CSCC). The last resulted in devising a process that led to the creation of four constellations of innovative solutions. Currently, they, together with city stakeholders, are planning for system demonstrators with a portfolio of interventions to be launched in the partner cities in January 2023.
Toolboxes for TPAs, actor roles and capacities, financing of TPs: Insights from the conversation with the guest speakers
Inspired by those vibrant and rapid developments, this workshop invited participants to start exploring TPAs as a new and evolving strategy for the governance of urban transitions. In the conversation with two guest speakers, Elina Järvelä and Olle Dierks, we touched upon the themes of 1) toolboxes for TPAs, 2) actor roles and capacities needed to implement them in cities, and 3) challenges and opportunities for financing transformative portfolios.
In her introductory presentation, Elina shared the context in which she works with TPAs in UNDP. Elina is involved in more than 10 pilots in the cities of Western Balkans, South Caucasus and Central Asia. About three years ago, UNDP identified portfolios as a mechanism to move from tactical to strategic innovations and the Regional Office for Europe and Central Asia launched an 8-month-long exploration of how portfolio-based approaches can be used to address wicked challenges in cities. This resulted in the development of the “Agorà model” which currently guides the work of UNDP in the first pilots of TPAs. Despite different entry points (e.g. energy transitions, air quality, circularity), all pilots have the ambition to foster both economic opportunities and vibrant communities in cities. The idea is to move from “single-point solutions” to interconnected innovations that learn from each other over time (in other words, form a portfolio).
Elina continued, explaining the typical stages they go through in the pilots of TPAs. Thus, they usually begin with the identification and mapping of existing collaborations, connections, influencing factors, and barriers to system changes in cities. The next stage is the design of a portfolio of interconnected interventions. For this, it is useful to understand system dynamics and identify areas to intervene (the idea similar to the “leverage points for intervening in systems”). The following “stage” is to dynamically manage the portfolio as a whole, improving capabilities, and creating an adaptive cycle based on learnings from interventions.
In his introductory talk, Olle shared his experience of applying portfolio thinking in Viable Cities initiatives, specifically focusing on the Climate Smart Cities Challenge (CSCC). CSCC is a process that includes the design of system demonstrators to address complex challenges formulated by four partner cities (Bogotá, Bristol, Curitiba, and Makindye Ssabagabo). The CSCC process is already ongoing for 2,5 years, with a competition phase launched a year ago (winning teams were announced at the beginning of October 2022). But for CSCC this is still the beginning. The main part is up to start next year when the winning teams in collaboration with respective cities will launch the implementation of the system demonstrators.
An essential part of the CSCC so far, was the so-called “team creation” led by Viable Cities, Ignite Sweden, Dark Matter Labs and UN-Habitat. In this part, initially not-connected innovators — providers of specific solutions — were guided through a process of building a common language and relating their “solutions” to the challenges put forward by the cities. This resulted in the reframing of those solutions and seeing them as a part of “system innovations” to address cities’ challenges. This will eventually be translated into system demonstrators during the currently ongoing planning phase. Importantly, learnings from CSCC are to be connected to the design of system demonstrators in Sweden which started this autumn by the six consortia selected within the joint call by Vinnova and Viable Cities. Olle summed up his presentation by highlighting the key role of directionality in the portfolio; the importance to embed in a portfolio not only “solutions” but also challenges, targets and investments; and thinking about alignments between different portfolios and learning across countries and continents.
Toolboxes
The introductory presentations were followed by the conversation between Kateryna, Olle and Elina. The first theme we touched upon in the conversation was methods and approaches that form an emerging toolbox of TPAs. Elina shared how UNDP uses their “sensemaking protocol” at different stages of TPAs. The Protocol is both a social space and a practice of sharing experiences, creating connections and listening between the lines to then generate insights and create intelligence for further actions. An interesting role that emerged in this process is of “window stewards” — people responsible for listening from a certain perspective and capturing relevant insights. Elina explained that usually, one sensemaking session takes 2–3 days (half-days) and covers both sharing of learnings by different people and formulating collectively actionable advice for the next steps. Sensemaking sessions are used at different stages of TPA processes. In the beginning, they serve for the exploration of what is already present in an (urban) system (e.g. existing partnerships, activities, etc). Later in the process, sensemaking sessions contribute to the mutual adaptation and (re)framing of actions. After some time, they can help to understand whether an initial intent is still valid, considering changes in a surrounding context. In the course of sensemaking sessions, documentation is important. Currently, UNDP launches dashboards for capturing actionable recommendations and learnings in cities. Elina highlights the importance of setting up a certain “rhythm” in a city to regularly hold sensemaking sessions — for example, monthly with a focus on specific interventions, quarterly with a focus on strategic areas, and annually — to adjust intent. With the help of such sessions, learnings are structured and shared.
In CSCC, a starting point for a portfolio-based approach was somewhat different if compared with the UNDP pilots. Cities competed to become partners in the CSCC, proposing their challenges. Four cities were selected to present their challenges for the competition. The portfolio thinking then came into play when “providers of solutions” to address those challenges had to make a leap from their disconnected offers to a consolidated portfolio with the potential to deliver system transformation in a respective city. In such a way the instruments embedded in the CSCC were pushing for portfolio-based approaches to be adopted both by cities and innovators. Four winning teams jointly provide a spectrum of interconnected solutions across not only technology but also policy, behaviour change, and investments. All with a strong focus on the challenges proposed by the partner cities. Olle highlighted the importance of a shared language and adopting a similar approach by those initially disconnected innovators from all over the world. It was also essential to realise what value each innovator contributes and how these come together into the knowledge they bring as a joint portfolio. Olle emphasised that the long-term commitments of all involved partners, cities and innovators are crucial for the excitement and building trust that upcoming challenges (much expected in any innovation process) will be possible to overcome together. In the future, more partners can join and contribute to the system demonstrators, especially in parts for which knowledge gaps will be identified.
Actor roles and capacities
The next theme in the conversation was actor roles and capacities needed to implement TPAs. Elina explained that for UNDP the aim is to build capacities in local actors not to be actively present in the context themselves. She shared two somewhat different strategies UNDP adopted in the piloting of TPAs. In an earlier one, within the City Experiment Fund (CEF), UNDP together with their technical partners played a more proactive role, taking a lead in the design of portfolios, adding new lenses and identifying what interventions can be more transformative. But they soon realised that such an approach is not sustainable in the long run and will not lead to the local capacities being created. Considering this, in another initiative — the Mayors for Economic Growth and the new phase of CEF, the approach taken by UNDP is much more focused on capacity-building. Co-design sessions with local governments are organised and more time is given for them to consider their role in the ecosystem of urban actors and changing their mindsets. With this, the goal of UNDP is in 2–3 years to build capabilities in municipalities so they can coordinate work together with their partners and become true “portfolio holders”. Elina suggests that it will also be important for municipalities to introduce new ways of working, for example, adopting more flexible procurements, to be able to adopt TPAs. New capabilities such as foresight, system thinking, and design will be needed in municipalities. Elina also emphasised that changes will have to occur not only in municipalities but across all involved actors, including UNDP. She shared that UNDP goes through a kind of identity crisis, realising that there is a need to rethink its traditional role of knowledge provider and supplier of “best practices” which in the uncertain context of urban transitions might not exist in a universal sense and constant adaptation is needed from all involved.
Olle added highlighting that in CSCC, as in other initiatives supported by Viable Cities, municipalities are envisioned in a “driving seat” for transitions. For example, in the selection of winning teams, a lot of trust was given to the opinions of the local governments who will eventually have to collaborate with those winners and jointly implement system demonstrators in their cities. Talking about the actor roles in CSCC, Olle reminded about his slides with multiple interconnections depicted between all involved actors, saying that an orchestration role in the implementation of system demonstrators is expected to be played by the local governments. Together, local governments and innovator teams will also have to make sure that more funding is available in the future so the system demonstrators can be implemented. And the role of all involved in this is also crucial, so this is a highly collaborative process in all its aspects.
Financing
By the end of the conversation, we switched to the theme of financing which emerged as an essential part of TPAs across UNDP cases and in CSCC. Olle began by saying that it is necessary to think about financing on multiple levels — upcoming procurements in the cities, learning and insights that can influence future procurements, and how to change financial flows to support portfolios of actions. Within CSCC the ambition is to leverage 300 million Euros for four cities. Olle expects that the question of financing system demonstrators will be a big one in the context of system demonstrators in Swedish cities too. He suggested that it not necessarily should be very costly, currently, the thinking is to catalyse about 2–4 million Euros per city per year. The expectation is that it will be a need to connect across different governmental agencies in Sweden and use different calls for funding. It might be relevant to check what funders are out there which can be relevant for the system demonstrators. The dialogue with many relevant institutions already started to leverage more financing in urban transitions. Beyond CSCC, Viable Cities is supporting the development and pilots of so-called “Climate investment plans” as a tool to connect climate actions to financial flows in cities. Olle believes a lot in this direction will happen within the next months.
Continuing on the topic, Elina stressed that financing is a tough question in the context of TPAs. On one hand, it would be logical to expect that by moving from siloed programming, we would also move away from siloed financing. In practice, though, this is rather challenging. In the development sector, donors play an important role. And pulling funding from different donors would imply a need to deal with multi-partner negotiations, agreeing on terms and conditions, and considering different evaluation criteria and requirements. This kind of challenge makes the concept of “systemic funds” rather theoretical for the moment and more efforts are needed to connect it to the practice. Another approach for financing transformative portfolios is to mobilise investments connected to the same intent or purpose. For example, initiatives funded by different funders can still be managed as part of the same portfolio. Elina also stressed the very important factor of providing seed funding for activating portfolios in cities. This is to make it possible after the design phase to launch the first interventions. Such seed funding can also be regarded as an element of de-risking in portfolio-based approaches — after someone started investing in a portfolio, it can be much easier to invite others to join. Elina shared an example from North Macedonia, where local actors managed to successfully mobilise more funding after the initial seed investment enabled successful first steps.
Summing up and questions for further exploration of TPAs
In the concluding part of the workshop, we had a chance to ask Olle and Elina a few questions highly voted by the participants. One such question was about learning in portfolio-based approaches. In response to this, Elina again highlighted the importance of systematically capturing learning (following a certain “rhythm”) and creating roles and responsibilities for doing so. Olle added on the importance of learning by doing, collaborating and experimenting — processes in which a lot of tacit knowledge is created. Both Olle and Elina stressed that it is essential to transfer key learnings from the level of individuals and single organisations to the collective level and from cities to governmental agencies. Olle also highlighted the role of Climate City Contracts as a mechanism for cities and Swedish governmental agencies to collect on an annual basis their learnings and focus areas they are committing to address. On the institutionalisation of learning, Olle mentions that one ambition with the system demonstrators is to do exactly this and turn learnings directly into practical actions by, for example, influencing procurement mechanisms in cities, or actively addressing identified barriers for changes when implementing a system demonstrator.
When asked to name top recommendations for Swedish cities for working with TPAs, Olle suggested the importance of strengthening the role of local governments as a catalyst of changes, stressing many great examples of how collaborations with different stakeholders in cities are already fostered by Swedish municipalities. One important point here, Olle raises, is not to lock yourself in the boundaries of a single city but rather open up for collaborations and “solution providers” from all over the world. When a challenge can be owned by a city, the ways to solve it can sometimes be found elsewhere. And having a well-defined direction, taking active leadership in reaching it and prioritising challenges can make it much easier for other public and private actors to join in and contribute.
One important question we did not have time to address is the role of culture and local context in the design of transformative portfolios. The question was asked by Julia Martinez from ALC, who joined the workshop as a participant this time. In the future, we would very much like to see her as a speaker to share the “community listening” method used by the team of ALC to design inclusive and socially resilient transformative portfolios in cities across the globe.
Another important aspect of TPAs we didn’t have time to touch upon in the workshop is the logic that underlines a composition of a transformative portfolio, also called a “theory of change”. As the “funnelling vs layering” metaphor suggests, TPAs can be guided by different ideas of what to include as elements of a transformative portfolio. To achieve the transformative potential of such portfolios, it might be useful to get insights from research fields concerned with changes in societal systems such as transition studies and complex system theory. Though, the question of how to devise such a “theory of change” in a specific context and in collaboration with many actors, would require further attention and deserve another conversation.
Many more interesting questions were formulated by the participants in the last interactive part of the workshop. These questions indicate an interest in further connecting TPAs to the realities of Swedish municipalities, finding synergies with existing ways of working (e.g. “process steering”) or challenging them by collaboratively applying TPAs in cities.
This article, embedded links and recording of this workshop on the YouTube channel is a continuation for accumulating materials and knowledge about TPAs, and reflecting on their implications for urban governance. It also contributes to ensuring clarity and transparency with regard to the multitude of approaches that emerge for more adequately addressing the complexity and uncertainty in the governance of urban transitions.
Referencing this material
If you want to use any part of this material, please reference this artcile as following:
Pereverza, K. 2022. Transformative portfolio-based approaches for urban transition governance: Insights from the recent City Lab workshop. Medium “Viable Cities”. Available from: https://medium.com/viable-cities/transformative-portfolio-based-approaches-for-urban-transition-governance-insights-from-the-recent-6dca5d6fad02
References
Hodgson, D., Fred, M., Bailey, S. and Hall, P. eds., 2019. The Projectification of the Public Sector. Routledge.
Munck af Rosenschöld, J., 2019. Inducing institutional change through projects? Three models of projectified governance. J. Environ. Policy Plan. 21, 333–344. https://doi.org/10.1080/1523908X.2019.1606702
Pereverza, K., 2022. (Re)framing of challenges in portfolio-based approaches for system transformations. Medium of UNDP Innovation. https://medium.com/@undp.innovation/re-framing-of-challenges-in-portfolio-based-approaches-for-system-transformations-55cf30f5725c
Torrens, J., von Wirth, T., 2021. Experimentation or projectification of urban change? A critical appraisal and three steps forward. Urban Transform. 1–17. https://doi.org/10.1186/s42854-021-00025-1
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