the disruption ahead

February 13, 2023  /  Martin Canning

smart cities:

preparing for the disruption ahead

A three-part article series.

Evergreen Brick Works, Toronto, Ontario, Canada.

Public sector markets are driving a new shared-value definition of innovation in Canada (Part I).

Public services are those – such as transit, public space, and social and affordable housing – considered so essential they are made available to most residents, whenever possible. Increasingly in Canada, there is a shift in the way public services are provided, especially at the municipal or community level. While local governments retain ultimate accountability, organizations from all sectors regularly compete for the shared responsibility to deliver different types of services to the public, or contribute to their delivery. Services managed in this way and the related transactions are collectively known as public sector or public service markets.

Data and technology-based approaches are often considered for municipal-level, public sector solutions and the term often used to describe this domain of market activity is “smart cities.” There are numerous smart cities definitions but the term often contains inherent bias toward large, urban contexts, i.e. “cities” (versus mid-sized or small municipalities, or communities more broadly). In addition, many definitions and interpretations focus primarily on the commercial aspects of information communications technology (ICT). Although some definitions are more comprehensive, most display a public sector relevance as a constant. The crux of the differences across definitions tends to surface around the closely related concepts of innovation and value, and the differences between a public sector application and the commercial sort.

Cities, however – or, more specifically, municipalities – is a relatively well-defined concept. Through an administrative lens, municipalities essentially represent practical service areas that matter in our everyday lives: water and wastewater, garbage collection, transit, roads, and public health. But the concept of a municipality also deserves broadening if we want to understand how to reduce market friction and maximize utility and value. Municipalities include “communities” and local neighbourhoods. They include sports and recreation centres, parks and playgrounds, and barbecues, and friends and families. It is only when the concept of smart cities is advanced to include a relevance to all size of municipality, alongside a deep link to community, will the policymaker or entrepreneur unlock the full opportunity or impact of “smart,” and a balanced understanding of value can finally emerge across the smart cities innovation value chain.

It is difficult to get to the bottom of an understanding of “smart” without an associated understanding of the idea of innovation and how it has been applied in both public sector and commercial contexts. A relatively established definition of innovation has been developed by the Organization of Economic Co-operation and Development (OECD) and operationalized by governments around the world. The definition and associated guidelines for innovation-related data collection are often referred to simply as the “Oslo Manual.” The manual actually doesn’t define “government innovation” specifically but rather provides definitional grounding for general innovation:

An innovation is a new or improved product or process (or combination thereof) that differs significantly from the unit’s previous products or processes and that has been made available to potential users (product) or brought into use by the unit (process).

Although a little technocratic in its tone it is quite elegant, which is part of the reason the OECD’s innovation work underpins many international efforts to quantify and understand the policy performance of governments’ innovation investments. The difficulty in the Oslo Manual’s definition, and many of its operational attempts, lies within the subsidiary concepts of “product” and “process.” Products refer to goods and services and are primarily commercial terms. And “process” presents a conceptual difficulty in fully capturing the activities of public sector and social actors, which include: governance approaches, institutional development, organizational structure; policy, planning, strategy, prioritization, and programming are a few examples that do not easily slip into the concept of process. From true government innovation and social innovation perspectives some may feel traditional definitions of innovation are lacking. That said, the OECD definition is a decent starting point.

With a crucial conceptual limitation identified regarding the blended concepts of smart, cities, and innovation, the concept of value now becomes crucial in getting to the bottom of a near complete working definition for both policy makers and practitioners. Value is both explicit and implicit within the definition of innovation but must take a different form within a public sector application than its commercial counterpart.

Government or public sector value is definitely a form of shared value and includes: i) financial value, which is often applied through the lens of efficiency and “revenue neutrality,” i.e. not necessarily a for-profit lens (which obviously dominates commercial definitions of value); but also includes and emphasizes ii) social value (i.e. activities that increase wellbeing in society, like accessibility or shelter); and iii) strategic value (i.e. capacity to advance existing policy priorities like governance approaches or regulatory change). In many examples across government, measuring the “return on investment” or the “impact” of an activity could include forms of innovation that may be policy specific, and may not include any distinct commercial or financial value, at all.

Finally, it’s important to note, with the public sector’s evolution toward higher levels of ethics, transparency and accountability, governments and policy makers have an intricate matrix of competing priorities to manage. The uniqueness and complexity of public sector markets and the innovation demand function of government makes pre-procurement or pre-commercialization ideation, problem framing, and problem definition simultaneously necessary and extremely challenging. The frequent responsibility to provide detailed and technical planning documentation, and interdepartmental and system integration and alignment, naturally extend timelines throughout public sector purchasing and service delivery cycles. These constant, higher-order expectations often slow or even impede innovation; however, as a “mechanism,” are essential to understanding how the innovation process interacts with and within government, including at the community or municipal level.

Now that “smart” has been unpacked – broad forms of innovation, shared value and impact, data and technology approaches – and a more accurate “cities” context has taken shape – municipal service areas, public sector markets, community, place, and policy complexity – we can effectively repackage the “smart cities” concept around a definition that fits the practical requirements of local governments and strategic needs of policy makers; and hopefully it will also lend itself to industry interpretations that create new approaches for business and product development.

Fortunately, within the literature, there is a definition that stands out, with significant time and investment behind its development. Not insignificantly, it happens to be a Canadian definition. Open North – a Montreal-based nonprofit – alongside academics, local governments and numerous other stakeholders from across Canada, developed a guide that houses Canada’s definition of “open” smart cities. The definition reads:

An Open Smart City is where residents, civil society, academics, and the private sector collaborate with public officials to mobilize data and technologies when warranted in an ethical, accountable and transparent way to govern the community as a fair, viable and liveable commons; and balance economic development, social progress and environmental responsibility.

Although still lacking a direct reference to community, like all definitions, this is a starting point. Definitions help position formal interactions in ways that facilitate efficiency, clarity, and alignment within and among complex ecosystems. In other words, definitions matter. It is important that we talk together and not past one another, and it is important that we limit unnecessary ambiguity when the allocation of time and scarce resources are being considered.

Currents of commercially driven strategy influence policy decisions at all levels of government; however, the existing paradigm is being challenged by communities and residents, and commercial markets are getting confused, or underperforming. Given traditional approaches this makes sense; there are a lot of key unanswered questions: How do public sector markets work and how are they colliding with commercial innovation? What does a “city as platform” even mean, and what is data governance? How does resident engagement and participation influence the product development cycle? Canada’s big firms, as well as small and medium sized enterprizes, are regularly faced with these types of questions.

The global, hyper-speed of commercial innovation is bumping up against the glacial nature of “community time” and the natural capacity limits of local governments and communities. Smart cities approaches can no longer be pure commercial solutions, based on the needs of large urban markets. This old understanding of the invisible hand is now colliding with new types of public sector markets and we are missing the value and innovation potential locked within the smart cities’ disruption taking place, across a variety of industries. While a milieu of uncertainty develops the definitions that guide our approaches hold implications for the health and well-being of Canadians, as well as our wealth and prosperity. Rallying our society around a community-based, shared-value definition of open smart cities will be essential for policymakers and entrepreneurs to navigate the uncertain innovation landscape that lies ahead.

Martin Canning is Executive Director, Government Innovation, at Evergreen Canada.

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categories / Smart Cities
tags / Smart Cities, smart cities, Urban Innovation, urban innovation, Innovation, innovation, Placemaking, placemaking, City Building, city building, Urban Planning, urban planning