SMART CITIES

Further praise for Smart Cities:

Smart cities require suitable technologies, sustainable business

models, and proper administration processes. This book conveys

concrete ways of how cities can become smart cities.

� Oliver Deuschle, SMIGHT at EnBW, Germany

This book succinctly expresses why only one smart city can persist

in face of location competition.

� Yvonne Beutler, Vice President of City Council, Switzerland

Digitalization opens up myriad development possibilities in cities.

This book expertly delineates various “best practices” as well as

core elements of a systematic and strategic approach.

� Prof. Thomas Schildhauer, Humboldt Institute for

Internet and Society, Germany

Municipal utilities not only construct and operate essential digital

infrastructure, but also new services for a smart city � from waste

disposal “on demand” to electromobility. This book can especially

assist small public utility companies in their efforts to develop and

realize a strategy for their smart city.

� Katherina Reiche, Verband kommunaler

Unternehmen e.V., Germany

The realization of smart city projects presupposes a uniform

understanding of their relevant dimensions. This book and its smart

city management model offer the ideal foundation for this crucial

unification.

� Orlando Gehrig, Swisspower Innovation, Switzerland

SMART CITIES

Introducing DigitalInnovation to Cit ies

BY

OLIVER GASSMANNJONAS BÖHM

MAXIMILIAN PALMIÉUniversity of St. Gallen, Switzerland

United Kingdom � North America � Japan � India � Malaysia � China

Emerald Publishing LimitedHoward House, Wagon Lane, Bingley BD16 1WA, UK

First edition 2019

Copyright r 2019 Emerald Publishing Limited

Reprints and permissions serviceContact: permissions@emeraldinsight.com

No part of this book may be reproduced, stored in a retrieval system, transmittedin any form or by any means electronic, mechanical, photocopying, recording orotherwise without either the prior written permission of the publisher or a licencepermitting restricted copying issued in the UK by The Copyright Licensing Agencyand in the USA by The Copyright Clearance Center. Any opinions expressed inthe chapters are those of the authors. Whilst Emerald makes every effort to ensurethe quality and accuracy of its content, Emerald makes no representation impliedor otherwise, as to the chapters’ suitability and application and disclaims anywarranties, express or implied, to their use.

British Library Cataloguing in Publication DataA catalogue record for this book is available from the British Library

ISBN: 978-1-78769-614-3 (Print)ISBN: 978-1-78769-613-6 (Online)ISBN: 978-1-78769-615-0 (Epub)

Certificate Number 1985ISO 14001

ISOQAR certified Management System,awarded to Emerald for adherence to Environmental standard ISO 14001:2004.

CONTENTS

List of Figures xi

List of Tables xv

Preface xvii

How to Use This Book 1

The Future of Cities and the Concept of Smart Cities 3

1. The Future of Cities 5Cities as a Megatrend 6Current Challenges for Cities 8

Challenge 1: Urbanization and Opposing Trends 9Challenge 2: Modernization Requires Time 13Challenge 3: Development of Diverse Lifestyles 13Challenge 4: Demographic Developments 13Challenge 5: Overloading of Infrastructure 13Challenge 6: Air Quality and Smog 17Challenge 7: Noise 19Challenge 8: Limited Resources of Cities 19Challenge 9: Mobility and Tourism 20Challenge 10: Tragedy of the Commons 20Challenge 11: Immigration 22Challenge 12: Flexibility 22

2. Smart Cities 25A New Role for City Administration 26The Digital Shadow of a City 27Service Areas of a Digital Shadow 31

Smart Environment 32Smart Living 34

Smart Economy 38Smart Mobility 40Smart Government 42Smart People 45

Obstacles for a Smart City 46Volatility 47Uncertainty 48Complexity 50Ambiguity 51The Most Common Obstacles 51

Business Models for a Smart City 57What Is a Business Model? 57

The Smart City Management Model 61Service Areas 61The Transformation Process 63Basic Elements 65

3. Smart City Lighthouse Projects 67Case Study: Vienna 67

Initiate Transformation 69Determine Location 71Develop Concepts and Synchronize Partners 74Activate Resources 79Realize Projects 81Operation and Institutionalization 87Conclusion 88

Case Study: Munich 89Initiate Transformation 91Determine Location 95Develop Concepts and Synchronize Partners 99Activate Resources 103Realize Projects 104Operation and Institutionalization 106Conclusion 107

Case Study: Lyon 109Initiate Transformation 110Determine Location 112

vi Contents

Develop Concept and Synchronize Partners 114Activate Resources 116Realize Projects 117Operation and Institutionalization 120Conclusion 120

Case Study: Songdo City 121Initiate Transformation 122Determine Location 123Develop Concepts and Synchronize Partners 125Activate Resources and Realize Projects 127Operation and Institutionalization 129Conclusion 130

Case Study: Toronto 130About Toronto 131Overview of Smart City Toronto 132Initiate Transformation 132Determine Location 134Develop Concepts and Synchronize Partners 136Activate Resources 137Waterfront Toronto: Initiate Transformation 138Waterfront Toronto: Determine Location 140Waterfront Toronto: Develop Concepts and Synchronize Partners 141What’s Interesting about Toronto? 143

What Can We Learn from the Lighthouse Projects? 147

4. Guidelines for Smart City Transformation 153St Gallen’s Pilot Projects 158Initiate Transformation 162

Preparations and Initial Considerations 162Assembling a Project Team 165Developing a Vision 166Setting Priorities 170Kickoff and Clarifying Responsibilities 172

Determine Location 178Internal Perspective 178External Perspective 180The Point-of-view Method 184

viiContents

Stakeholder Map 186Environmental Analysis 189Identifying Strategic Options 191Determining the Direction of Impact 194

Developing Concepts and Synchronizing Partners 197Ensuring Partner and Citizen Participation 198Designing and Implementing Data Governance 201Preparing Funding 203Developing Project Concepts 207Selecting the Right Technology Platform 209Developing Business Models 216Finding Partners for Implementation 222Dealing with Risks 224Define Criteria for Project Selection 231Performing Project Selection 233Developing Roadmaps 234Learning to Synchronize 237

Activate Resources 238Finding Partners 238Mobilizing Citizens 240Building a Project Coalition 242Clarify the Project Organization 245Defining Funding 248Removing Barriers 253

Realizing Projects 256Operation and Institutionalization 259

Designing an Operating Model with Scaling 262Initiating a Continuous Improvement Process 265Exploiting Synergies between Initiatives 267

5. Outlook 269Software Is Eating the World 269The Ubiquity of Data and Computing 269Computational Materials 270Decreasing Transaction Costs 271A Trend Toward Ecosystems 272The Rise of Artificial Intelligence 273

viii Contents

Unprecedented Forms of Mobility 275New Work or No Work 276The Merging of Humans and Machines 277The Dark Side of the Moon 277Twenty-one Critical Questions for Smart Cities in theTwenty-first Century 278

6. Tools for the Transformation into a Smart City 283The Smart City Maturity Model 283

How to Use the Model 283Stakeholder Map 292Worksheet: Smart City Initiative 293Risk Assessment 296

How to Complete a Risk Assessment 296Cause and Effect Tree 300

How to Use This Tool 301Question for Business Model Scaling 302

How to Use This Tool 303Patterns of Synergy 304

Contacts 309

Acknowledgements 311

Bibliography 315

Index 333

ixContents

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L IST OF FIGURES

Chapter 1

Figure 1.1. The Worldwide Urban and Rural Population from 1950 to2050. . . . . . . . . . . . . . . . . . . . . . . . . . 5

Figure 1.2 Typical Development of Urbanization in a Western and aNon-Western Nation. . . . . . . . . . . . . . . . . . . 8

Figure 1.3. The Most Urgent Challenges for Cities with Respect to SmartCity Topics. . . . . . . . . . . . . . . . . . . . . . . . 10

Figure 1.4. Challenges Addressed by Smart City Projects. . . . . . . . 11

Figure 1.5. Urbanization Worldwide. . . . . . . . . . . . . . . . . 12

Figure 1.6. Regions of Population Decline. . . . . . . . . . . . . . . 14

Figure 1.7. Citizens Fear the City’s Impact on Their Health. . . . . . . 17

Figure 1.8. Smog Values in London. . . . . . . . . . . . . . . . . . 18

Figure 1.9. Percentage of Individuals Exposed to Exceedingly LoudNight Noise, According to the Threshold Values Set by theWorld Health Organization. . . . . . . . . . . . . . . . 19

Figure 1.10. Worldwide Tourism Growth, 1996�2017. . . . . . . . . 20

Figure 1.11. The Frequently Double-digit Growth Rate of Tourism PlacesStress on Infrastructure. . . . . . . . . . . . . . . . . . . 21

Figure 1.12. Over-tourism in European Cities. . . . . . . . . . . . . . 21

Chapter 2

Figure 2.1. The Digital Shadow of a City. . . . . . . . . . . . . . . 30

Figure 2.2. The Warka Water Tower. . . . . . . . . . . . . . . . . 33

Figure 2.3. Development of the Tasks of Buildings in the Future EnergySystem of Switzerland; the Tasks Are in Parentheses. . . . . 35

Figure 2.4. The Holistic Concept of a Decentralized Energy System ofthe Urban Area of Suurstoffi, Zug Estates AG, 2018. . . . . 36

Figure 2.5. Overview of the Solution Space of Decentralized EnergySystems, Based on the Core Development Drivers:Technological Innovation, Business Model Innovation,Integration, and Digitalization. . . . . . . . . . . . . . . 37

Figure 2.6. Energy Hub in NEST at the Swiss Federal Laboratories forMaterials Science and Technology. . . . . . . . . . . . . 38

Figure 2.7. Smart Crosswalk. . . . . . . . . . . . . . . . . . . . . 42

Figure 2.8. Challenges of Smart City Transformations, According to aStudy Conducted by BI Intelligence. . . . . . . . . . . . . 52

Figure 2.9. The Main Smart City Challenges Faced by Mayors of USCities.. . . . . . . . . . . . . . . . . . . . . . . . . . 53

Figure 2.10. The Smart City Management Model. . . . . . . . . . . . 62

Chapter 3

Figure 3.1. Objectives of the Smart City Framework Strategy at aGlance. . . . . . . . . . . . . . . . . . . . . . . . . . 70

Figure 3.2. Smarter Together Project Area in Simmering, Vienna. . . . . 82

Figure 3.3. The SIMmobil Mobile Information Stand. . . . . . . . . . 83

Figure 3.4. Seestadt Aspern.. . . . . . . . . . . . . . . . . . . . . 86

Figure 3.5. Logo of Perspektive München, Munich’s Strategic UrbanDevelopment Concept. . . . . . . . . . . . . . . . . . . 91

Figure 3.6. Interaction of the Eight Central Objectives of City Planning inMunich. . . . . . . . . . . . . . . . . . . . . . . . . . 93

Figure 3.7. Overview of the Smart City Projects of Munich. . . . . . . 94

Figure 3.8. Organizational Structure of Munich’s Smart City Initiatives. . 94

Figure 3.9. Munich’s Smarter Together Project in the Freiham andNeuaubing Districts. . . . . . . . . . . . . . . . . . . . 107

Figure 3.10. Smarter Together Project Area in Lyon.. . . . . . . . . . . 115

Figure 3.11. The Navly Electric and Autonomous Shuttle Service. . . . . 119

Figure 3.12. Master Plan of Songdo City. . . . . . . . . . . . . . . . 127

Figure 3.13. Five-step Action Plan as Proposed by the SCWG. . . . . . 135

Figure 3.14. Quayside and Toronto’s Eastern Waterfront. . . . . . . . . 139

xii List of Figures

Figure 3.15. Sidewalk Toronto’s Sustainability Vision. . . . . . . . . . . 141

Figure 3.16. Flexible and Mixed Uses.. . . . . . . . . . . . . . . . . 142

Chapter 4

Figure 4.1. Communication by the Public Communications Departmentof St Gallen Regarding Smart City Projects in St Gallen(2017). . . . . . . . . . . . . . . . . . . . . . . . . . 157

Figure 4.2. Visual Representation of the Remishueb Project.. . . . . . . 160

Figure 4.3. First Step of the Transformation to a Smart City According tothe Smart City Management Model: Initiate Transformation.. 163

Figure 4.4. Public Value Scorecard for Project Selection. . . . . . . . . 171

Figure 4.5. Sample RACI Matrix.. . . . . . . . . . . . . . . . . . . 175

Figure 4.6. Responsibility Matrix for the St Gallen Smart City Initiative. . 176

Figure 4.7. Organizational Model for the St Gallen Smart City. . . . . 176

Figure 4.8. Step 2 of the Smart City Transformation According to theSmart City Management Model: Determine Location.. . . . 179

Figure 4.9. Smart City Maturity Model. . . . . . . . . . . . . . . . . 181

Figure 4.10. Stakeholders in the Development of a Smart City. . . . . . 184

Figure 4.11. Point-of-view Analysis for St Gallen. . . . . . . . . . . . . 186

Figure 4.12. A Map of the Stakeholder Network in St Gallen. . . . . . . 188

Figure 4.13. Visualization of a Benchmarking Exercise. . . . . . . . . . 191

Figure 4.14. Definition of the Desired State. . . . . . . . . . . . . . . 196

Figure 4.15. Step 3 of the Smart City Transformation According to theSmart City Management Model: Develop Concepts andSynchronize Partners. . . . . . . . . . . . . . . . . . . 197

Figure 4.16. New Services Made Possible by the New 5G Standard. . . 212

Figure 4.17. The Magic Triangle of a Business Model. . . . . . . . . . 217

Figure 4.18. Sample of a Smart City Probability-of-impact Matrix. . . . . 227

Figure 4.19. A Portion of St Gallen’s Impact Tree. . . . . . . . . . . . 229

Figure 4.20. Step 4 of the Smart City Transformation According to theSmart City Management Model: Mobilizing Resources. . . 239

xiiiList of Figures

Figure 4.21. Conflicting Objectives in the Project Organization. . . . . . 246

Figure 4.22. Examples of Goals that Typically Call for Private VersusPublic Financing. . . . . . . . . . . . . . . . . . . . . 249

Figure 4.23. Financial Cycles in a Smart City Transformation. . . . . . . 251

Figure 4.24. The “Valley of Death” in Smart City Transformation Projects. . 252

Figure 4.25. Step 5 of the Smart City Transformation According to theSmart City Management Model: Realizing Projects. . . . . 256

Figure 4.26. Step 6 of the Smart City Transformation According to theSmart City Management Model: Operation andInstitutionalization. . . . . . . . . . . . . . . . . . . . . 260

Figure 4.27. Existing Smart Cities and How They Use Synergies. . . . . 268

Chapter 6

Figure 6.1. Stakeholder Map. . . . . . . . . . . . . . . . . . . . . 292

Figure 6.2. Worksheet for the Conception of a Smart City Initiative. . . 293

Figure 6.3. Example of a Completed Worksheet. . . . . . . . . . . . 294

Figure 6.4. Risk Probability and Impact Matrix. . . . . . . . . . . . . 295

Figure 6.5. Effect Tree. . . . . . . . . . . . . . . . . . . . . . . . 300

Figure 6.6. Scaling Questionnaire, Part 1. . . . . . . . . . . . . . . 301

Figure 6.7. Scaling Questionnaire, Part 2. . . . . . . . . . . . . . . 302

Figure 6.8. Scaling Questionnaire, Part 3. . . . . . . . . . . . . . . 303

xiv List of Figures

L IST OF TABLES

Chapter 1

Table 1.1. TomTom Traffic Index for Smaller and Mega Cities (2018). . 15

Chapter 2

Table 2.1. Comparing Traditional City Management and ParameciumPolitics. . . . . . . . . . . . . . . . . . . . . . . . . . 45

Chapter 3

Table 3.1. Qualitative Smart City Objectives in Munich. . . . . . . . 100

Chapter 4

Table 4.1. Checklist for the Project Team. . . . . . . . . . . . . . . 165

Table 4.2. Checklist for a Visioning Workshop.. . . . . . . . . . . . 167

Table 4.3. Examples of “Smartness” in European Cities’ Smart CityVisions. . . . . . . . . . . . . . . . . . . . . . . . . . 170

Table 4.4. St Gallen’s Initial Self-assessment. . . . . . . . . . . . . . 182

Table 4.5. Examples of Smart City Implementation Initiatives in EachService Area. . . . . . . . . . . . . . . . . . . . . . . 192

Table 4.6. Ideas for Smart City Development in St Gallen. . . . . . . 193

Table 4.7. Typical Life Cycles of Smart City Infrastructure. . . . . . . . 204

Table 4.8. Possible Sources of Financing for Smart City Projects. . . . . 205

Table 4.9. Overview of Risk Categories in Smart City TransformationProjects.. . . . . . . . . . . . . . . . . . . . . . . . . 225

Table 4.10. Checklist for an Initial Risk Assessment. . . . . . . . . . . 227

Table 4.11. Examples of Project Objectives and Possible Performance-based Indicators. . . . . . . . . . . . . . . . . . . . . 230

Table 4.12. Example of a Benefit Value Analysis Using a Likert Scale andWeighting. . . . . . . . . . . . . . . . . . . . . . . . 233

Table 4.13. Synchronization Mechanisms for Smart City Initiatives. . . . 237

Table 4.14. Comparison between Technology-oriented and Citizen-oriented Smart City Planning. . . . . . . . . . . . . . . . 241

Table 4.15. A Comparison between Traditional and Smart CityProcurement Management. . . . . . . . . . . . . . . . . 255

Table 4.16. Reasons for the Failure of Smart City Projects. . . . . . . . 257

Table 4.17. Differences between Innovation Mode and ReplicationMode. . . . . . . . . . . . . . . . . . . . . . . . . . 261

Table 4.18. Key Decisions in the Scaling Up Process. . . . . . . . . . 262

Chapter 6

Table 6.1. Questionnaire to Assess Your City Using the Smart CityMaturity Model. . . . . . . . . . . . . . . . . . . . . . 284

Table 6.2. Risk Assessment Checklist. . . . . . . . . . . . . . . . . 296

Table 6.3. Possible Synergy Patterns for different Types of Cities,Based on Centralization of Asset Management andAccess to Funding.. . . . . . . . . . . . . . . . . . . . 304

xvi List of Tables

PREFACE

The concept of the “smart city” promises to solve many of the urgent

issues that accompany progressive urbanization � overwhelming traffic

congestion, strains on energy and water systems, delinquency, inadequate

housing, and the lack of social inclusion � through digitalization. Smart

cities are therefore highly relevant for political decision makers in munici-

palities, administrative agencies, and nonprofit and civic organizations.

Moreover, smart or “ecosystem” cities offer great potential for countless

corporations in the fields of information technology, real estate, telecom-

munications, energy supply, auto-mobility, sensor systems, and data ana-

lytics. Accordingly, it is not surprising that numerous highly innovative

companies, including IBM, Cisco, Telekom, Siemens, Toshiba, and

Google, along with public utilities around the world, are actively investing

in smart city development. Additionally, many startups are concurrently

entering the Internet of Things (IoT) and energy fields, placing competitive

pressure on established firms.

The social and political demands of the energy revolution, combined with

the auspicious possibilities of an interconnected yet decentralized world

within the framework of IoT, are accelerating the transformation of urban

centers toward becoming smart cities. Despite the exploitation of existing

potentials by “lighthouse” (i.e., pilot) cities, such as Barcelona, Munich,

Lyon, and Vienna, most municipalities have pursued smart city opportunities

only to a limited extent thus far. As a result, the discrepancies between lead-

ing smart cities and less ambitious cities are widening. The need for action is

frequently discerned, yet the most appropriate path of action often remains

unclear.

Various important questions about smart city development are still unan-

swered. What are the core elements of smart cities? What steps should be fol-

lowed in building them? Where does the greatest potential lie? What is the

ideal starting point? What procedures have other cities applied? What can be

learned from pioneers in the field? Are the successes of the greenfield

approaches applied by Asian smart cities transferable to other parts of the

world? What methods and tools can be usefully implemented? What busi-

ness models have participating firms used? How can diverse stakeholders be

effectively integrated?

This book answers these questions in the form of solution paths, accom-

panied by design concepts and success factors. It covers the following main

topics:

• the future of cities;

• an overview of smart cities;

• smart city management model;

• smart city lighthouses;

• guidelines for smart city transformation; and

• tools for making your city a smart city.

Cities today face tremendous challenges concerning livability, mobility,

energy, and communication. These challenges are forcing them to reconsider

their former self-conception, their functionality, and their service offerings.

However, cities that focus actively on their objectives and on the requisite

digital transformation can imagine and realize entirely new living spaces. To

help them achieve this goal, they should learn from the experiences of pio-

neers in the field, which we call lighthouse cities. Urban centers can orient

their strategies around the solutions and experiences of these role model cit-

ies, so as to design and execute their own situation-specific, customized

transformation. These smart city management models serve as reference

frames that provide basic fundamentals, offer recommendations for action,

and contribute to the synchronization of the transformation process. The

models are especially valuable as orientation tools introducing all stake-

holders in a city or region to the smart city concept.

This book is based on ongoing research undertaken by the Institute of

Technology Management (ITEM) and the Center for Energy Innovation,

Governance, and Investment at the University of St. Gallen. Worthy of par-

ticular mention are the European Union project “Smarter Together,” the

national energy research program comprising eight Swiss Competence

Centers for Energy Research (SCCERs), and numerous projects of the ITEM

with partners from the spheres of politics, administration, and the economy.

xviii Preface

The target audience for this book includes all stakeholders involved in a

smart city transformation:

• Mayors, council members, administrators, and managers who must

understand the impact of a smart city transformation and wish to be

informed about promising paths of action.

• Decision makers in corporate settings (e.g., executives, innovation and

R&D leaders, project directors, product managers, and startup

entrepreneurs) who are involved in the realization of smart cities.

• Citizens who want to have a better understanding of future conceptions of

their living environment.

A book is always a collaborative learning process.1 We thank our partners

in Smarter Together, which we were able to assist in the development of busi-

ness models for the lighthouse projects and that in return gave us great

insights in the process of developing a smart city. The concrete implementation

example in the city of St. Gallen was developed in close collaboration with the

municipal utility of St. Gallen (sgsw). We are particularly grateful to Marco

Huwiler and Céline Hähni as well as the mayor of St. Gallen, Thomas

Scheitlin who gave great insights and wrote the case study on St. Gallen. Very

special thanks further go to Karin Klöti, Adrian Joas, and Laura Caviezel for

their detailed research on the case studies, Simon Kuster for the elaboration of

smart city business models, and Matthias Sulzer, Andrea Perl, and Kilian

Schmück for their assistance with the sections on smart energy, smart mobil-

ity, and smart government. Lastly, we especially thank Pete Baker, Katy

Mathers, and the entire Emerald team for making this book possible.

The urban challenges of the future require more intelligent concepts at all

levels. The tools, processes, checklists, tips, and general experiences that

have arisen from our research and practice-related work and are presented

in this book can facilitate the development of such key concepts by decision

makers. They provide a solid foundation for a diverse range of smart city

transformation projects.

We hope that these concepts will spread, and we wish all individuals

responsible for the realization of smart city elements much success in the

development of sustainable environmental, social, and economic solutions.

xixPreface

NOTE

1. For a full and detailed description of all the contributions, see the

acknowledgements.

xx Preface

HOW TO USE THIS BOOK

This book is designed as a standard, practical reference for executing smart

city transformations. It should give everybody involved the necessary back-

ground understanding and tools to get their hands dirty. Here is how we

suggest that you use it.

First: Get an overall understanding of what a smart city can be, what the

challenges are, and where the topic is heading. Focus on the big picture;

don’t get buried in specifics, which will change rapidly with new develop-

ments and technology improvements.

Second: Pay very close attention to the Smart City Management Model. This

comprehensive model is not an academic exercise; it needs to be applied. It

can become the most central management tool in your own smart city pro-

jects. You may wish to adjust it slightly, but be sure to involve your stake-

holders in any revisions.

Third: Find inspiration from how other cities have pursued transformation

by reading about the model cities’ lighthouse projects and reviewing the sec-

tion on tools.

Finally: Engage! The full potential of this book, and especially of the Smart

City Management Model, emerges when it is shared with others. To build

consensus among all stakeholders, focus on execution rather than on differ-

ences in definitions. For example, hold a kickoff meeting with your

stakeholders and discuss who will be responsible for each part of the model.

Shortcuts: The book addresses many different stakeholders in smart city

transformations and tries to be as comprehensive as possible. In view of that

structure, particular stakeholders might appreciate knowing a few shortcuts

to the content most relevant to them:

1

• The decision maker: Chapters 1 and 2 explain what a smart city is and

how to manage it. These are the most important chapters for you. If you

want further detail on large cities, read the case studies. For smaller cities

(around 100,000 people), the example of the Swiss city St. Gallen in

Chapter 5 shows that every city has the potential to take meaningful

action!

• The implementer: If you are in charge of managing implementation and

need the right tools, tips, and tricks to guide you, first familiarize yourself

with the Smart City Management Model. Then jump right into the tools

section and do the analysis of your city’s maturity level.

2 Smart Cities: Introducing Digital Innovation to Cities

THE FUTURE OF CITIES AND THECONCEPT OF SMART CITIES

The 19th century was a century of empires, the 20th century,

a century of nation states. The 21st century will

be a century of cities

� Wellington Webb,

Former Mayor of Denver,

Colorado, United States1

Cities are both a curse and a blessing. On the one hand, they contribute to

sustainability in important ways. Their inhabitants are more eco-friendly,

produce less CO2, and earn a higher average income (GDP per capita) than

rural residents. On the other hand, cities are often associated with crime, air

pollution, health problems, high population density, increased soil sealing,

social conflicts, and traffic issues. The smart city concept attempts to con-

front these negative aspects of cities with innovative, technology-based

approaches. Smart cities are introducing and disseminating competitive

advantages on an international scale.

China has incorporated smart cities as an integral component of its urban

planning, followed by India with its “100 Smart Cities” plan. The number

of smart city projects is growing daily. The Japanese firm Panasonic is con-

structing a new residential district, “Future Living Berlin,” in the city’s

Adlershof section, including 69 housing units with electricity and heat flow

automatically regulated. Microsoft founder Bill Gates has recently purchased

a tract of land in Arizona where he hopes to create a high-tech city with a

high-speed cyber-network, data centers, and autonomous vehicles.

Furthermore, a futuristic $500 billion megacity showcasing, among other

3

things, passenger drones has been planned for the desert sands of Saudi

Arabia, under the leadership of former Siemens CEO Klaus Kleinfeld.

These developments are making the very nature of the city a center of

attention with regard to the sustainability of regions or nations. In the first

part of this book, we consider why this is the case, what the smart city con-

cept truly offers cities beyond the facade of glossy brochures created by tech-

nology firms, and where typical implementation obstacles can be expected.

Despite the often-cited examples of smart megacity projects, across the

globe small and medium-sized cities are increasingly struggling with rapid

changes as well. Although the proportion of the world population living in

megacities (i.e., cities with more than 10 million inhabitants) has grown to

5.3% in 2010 (compared to 1.4% in the 1960s) and will reach 7.9% in

2025 according to projections, small and medium-sized cities (with between

300,000 and 5 million inhabitants) have experienced equally rapid develop-

ment: The proportion of the global population living in such cities increased

from 11.2% in 1960 to 15.4% in 1990 and then to 19% in 2010, and it is

projected to reach 22.4% by 2025. In other words, far more people live in

modest-sized cities than in megacities. This frequently ignored fact leads

inevitably to the conclusion that medium-sized cities and their municipalities

should assume a predominant role with respect to smart city initiatives in

Europe. These cities will be responsible for spreading smart city ideas. Thus,

this book examines the very specific challenges of such cities.

NOTE

1. Huffington Post, 2017.

4 Smart Cities: Introducing Digital Innovation to Cities

CHAPTER 1

THE FUTURE OF CITIES

The projections convey a clear message: cities represent the living environ-

ment of the future. The “century of the city” has been a crucial theme pre-

occupying politicians, business developers, city planners, public authorities,

and citizens in recent years (Figure 1.1).

Figure 1.1. The Worldwide Urban and Rural Population from 1950 to2050.

Source: United Nations (2015).

5

CITIES AS A MEGATREND

The importance of cities for the future of civilization becomes evident when

one considers the following facts:

• Worldwide, more individuals are living in cities than in rural areas. In

2014, 54% of the human population resided in cities, whereas in 1950,

city dwellers constituted only 30% of the global population.

• In 2040, 65% of the global population will be living in cities.

• Every second two persons move into a city worldwide.

• In 2050, 70% of the global population will be living in cities. Urban

societies will consume 80% of total energy, produce 75% of total CO2

emissions, and expend 75% of resources.

• Urban centers possess massive appeal. The three most popular city

hashtags on Instagram in 2016 (#NYC, #London, #Paris) were mentioned

in more than 180 million tweets.

The growth of urban economic centers is already causing the importance of

countries to diminish. Silicon Valley, the epitome of innovation in the digital

age, is competing with cities such as Shanghai, Boston, and Bangalore, rather

than with nations such as India or China. This trend toward the increasing

importance of cities, which may even surpass the significance of nations, not

only entails bright prospects for urban areas but also great challenges: noise,

smog, mobility bottlenecks, tightly constrained living spaces, overloaded energy

and communication infrastructure, the redefinition of the urban role, modifica-

tions of existing structures, and social challenges related to living and working.

The challenges confronting cities vary significantly depending on the region

and the city’s size. Massive urban regions such as Tokyo�Yokohama, Jakarta,

Delhi, Manila, Shanghai, and Mexico City have all exceeded 20 million inhabi-

tants and have experienced enormous population growth in the last few

decades. These cities have very different challenges and opportunities from cities

such as Stuttgart, Porto, Halifax, Richmond, or Boise.

Urbanization Across the World (United Nations, 2017)

Africa: Africa has the lowest level of urbanization, with an annual urban

growth rate of 4%. The number of cities in Africa with more than one

6 Smart Cities: Introducing Digital Innovation to Cities

million inhabitants has grown rapidly from 28 in 1995 to 43 in 2005 and

59 in 2015. It is expected that the number of individuals experiencing

urbanization will rise from 413 million (2010) to 569 million (2020).

Asia-Pacific region: About half of all people living today are in Asia, which

is experiencing rapid urbanization, largely due to the industrialization of

China and India. The impact of Asian cities on the world stage is increas-

ingly apparent. In global city rankings, based on its gross domestic prod-

uct, Shanghai is expected to rise from 25th place in 2008 to 9th place in

2025. The number of city dwellers in this region will increase from 1.675

billion (40% of all residents) in 2010 to 2.086 billion (47%) in 2020.

Latin America: Demographic changes during the past century have

prompted the development of a highly urbanized structure in Latin

America. About 540 million Latin Americans (78% of the total popula-

tion) are living in cities. However, regional differences exist. In some South

American countries, the proportion of city residents has approached 90%,

whereas in Central America this demographic group represents only 50%

of the population. As a whole, the urbanization level for the entire region

is expected to increase to about 83% by 2020.

North America: In contrast to Africa, Asia, and Latin America, North

America is experiencing relatively moderate population growth (0.9%

annually between 2000 and 2010), 75% of which is occurring in metropol-

itan areas. However, this growth is not uniform. In fact, the suburban

growth rate was three times as high as that of inner cities. Migration from

northern to southern regions has occurred, leading to especially high popu-

lation growth in suburbs of southern US cities. Nonetheless, large cities are

still growing due to the high proportion of immigrants, which balances out

the flight of other Americans away from cities. It is projected that the degree

of urbanization is continuing to increase from 82% (2010) to 85% (2020).

Europe: Urbanization patterns in Europe are similar to those in the United

States, with both differing sharply from demographic developments in the

rest of the world (see Figure 1.2). Various trends in Europe have caused

conceptions of the city to evolve constantly and have posed significant

challenges. In Europe, growing populations are not a major factor in

urban development; in fact, during the last century, one-third of European

7The Future of Cities

cities experienced a population decrease while another third had no signifi-

cant change. Projections indicate that the degree of urbanization is increas-

ing only slightly from 73% (2010) to 75% (2020).

Figure 1.2. Typical Development of Urbanization in a Western anda Non-Western Nation.

CURRENT CHALLENGES FOR CITIES

City planners are confronted by new and constantly changing sources of ten-

sion and strain. Consider the following surprising facts:

• In San Francisco, 4% of municipal waste is produced by domestic

animals, and that percentage continues to grow.

• In Germany, 320,000 coffee-to-go paper cups per day are consumed,

leading to 40,000 tons of waste every year.

• The Swiss city of Basel has 31,000 public parking spaces and 69,000

more on private property, whereas the city’s residents have registered only

57,000 automobiles. This is not efficient.

• The average speed of tramways is 15.4 km/h. Subways meanwhile drive at

an average speed of 31.3 km/h.

• 80% of buildings in Europe will still exist in 2050.

• Drivers in Frankfurt am Main spend on average 65 hours each year searching

for a parking space, resulting in costs amounting to 1,419 euros (Statista, 2017).

8 Smart Cities: Introducing Digital Innovation to Cities