Business, Innovation and the Future of Cities

Dr Tim Moonen

The Business of Cities

Evolve Arena, Oslo

December 2018

The Future of Cities conversation in 2018

• Smart Cities

• Hip Innovation Districts

• When Cities Will Rule the

World

• Threats to the

globalisation of cities

• Managing growth

• How to foster an innovation

economy

• How Cities can negotiate

their future

• The re-urbanisation of

businesses and capital

A lot about: Much less about:

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THE LEADERSHIP OF CITIES

AND URBAN INNOVATION

Mart in Parkinson

Secretary, Dept. of the Prime

Minister and Cabinet, Australia

Jeremy Kelly

Global Research, JLL

Bernard Salt

Managing Director of

The Demographics Group

in the Sydney Morning Herald

business leadership, think tanks and internat ional organisations

“This work [Creat ing Great Australian Cit ies] is one of the best applications of

this analysis to an industry and sector that I have seen in some t ime.”

“The long-running collaborat ion between JLL and The Business of Cit ies has

been fundamental to the success of JLL’s award-winning cit ies research pro-

gramme designed to give our clients unique perspectives on city performance

and prospects to support their real estate strategies.”

“ I do not believe there is any Australian consultancy that could have produced

a review of this scale and depth. Also relevant is that in my view there is no

government department that could have produced such a report .”

What the experts say:

+

The twin drivers of globalization & urbanisation, now mean the future is

all about the metropolitan area. It is the Metropolitan Century.

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The Metropolitan Century

• Globalisation + Exponential Technologies = 600 cities, growing and competing• The world is heading to 85% urbanised.• A new global urban system in train. • Synchronised with wider changes.• Challenge is to make urbanisation work.• Some countries adjusting better than others.

The twin drivers of globalization & urbanisation, now mean the future is

all about the metropolitan area. It is the Metropolitan Century.

5

The Metropolitan Century

• Globalisation + Exponential Technologies = 600 cities, growing and competing• The world is heading to 85% urbanised.• A new global urban system in train. • Synchronised with wider changes.• Challenge is to make urbanisation work.• Some countries adjusting better than others.

The decisions we make about our cities over

the next 30 years are of critical importance if

the metropolitan century is to succeed

Oslo

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The Megatrends defining the Metropolitan Century

1.Cities must be better managed and integrated.

2.Systems are getting smarter and more inter-operable.

3.New Industries are emerging and old industries are innovating.

Technology disrupts and accelerates cities

8

Technology catalyses new economies:

Innovation

Economy

Circular

Economy

Sharing

Economy

Experience

Economy

Smarter Systems

Smarter Governance

Smarter Citizens

AND drives smarter cities

10

AI

New business models, increased trade, and changed land use needs.

Businesses are engaging with cities much

more seriously in the Metropolitan Century

Cities are Emerging Markets for Businesses

Businesses are (Re)Urbanising

The Urbanisation of capital

The rise of Tradable Urban Services

Cities are Hubs of Business and Cluster

Innovation

Businesses rebranding and restructuring to

meet City goals

Proactive Businesses in City Markets: a selection….

10

Sustainable CitiesCredit Suisse

SiemensGE

ArupBombardier

Future CitesDeutsche Bank

Bank of America/ML

MicrosoftAtkins

Liveable CitiesMastercard

Hewlett PackardEngie

Mercer Monocle

Grosvenor

Global CitiesJP Morgan

AecomJLL

AT KearneyPWC

Smart Cities BNP ParibasSchneider

CiscoEricsson

IBMSamsung

BMW

Healthy CitiesMorgan Stanley

BBVA bank IBM BP

Peugeot Citroen

Bankable CitiesCitibank

World BankEIBADBIaDBAIIB

What does this mean for the Future of Business,

Innovation and Smartness in Cities?

Technology, the Innovation Economy, Industry 4.0

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Implications?

• New Industrial Applications. Industry 4.0. New sectors and transitions.

• Premium on proximity and interactivity

• Increased clustering/agglomeration of activity = place evolution

• Districts as venues for discovery + commercialisation

• Increased stickiness for talent/firms

The Drivers of the Innovation Economy are here to stay: Exponential tech, Competitive

pressures, diversification imperatives, wider societal goals, IP frameworks, innovation business models, better enterprise systems

Innovation

Economy

Smart Cities

Sharing data which supports applications and

discovery

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Boosts labour market to attract and retain talent

Increases demand for

flexible space

Produces platforms and

apps that support city functions

Unlock business advantages through

efficiencies

Create citizen services that attract and retain talent

1 San Francisco 0.9742 San Jose 0.9043 New York 0.8164 Boston 0.85 San Diego 0.7626 London 0.7367 Seattle 0.7118 Berlin 0.6849 Paris 0.68

10 Los Angeles 0.67411 Austin 0.64

12=Chicago 0.58512=Tel Aviv 0.585

14 Beijing 0.57314=Singapore 0.573

16 Toronto 0.56217 Denver 0.55818 Houston 0.55319 Tokyo 0.53520 Stockholm 0.52621 Seoul 0.51522 Washington DC 0.51323 Philadelphia 0.50824 Atlanta 0.525 Shanghai 0.453

Top 25 cities across 20 of the world’s

Global Innovation Benchmarks

Innovation Cities Smart Cities

1Zurich 0.9722Singapore 0.8933Basel 0.8874Shenzhen 0.8595Geneva 0.8446San Francisco 0.8347Gothenburg 0.8188Luxembourg 0.89Amsterdam 0.793

10Munich 0.76411Boston 0.75912Copenhagen 0.75913Oslo 0.73914New York 0.73915Stockholm 0.73616Montreal 0.72117Vancouver 0.72118Berlin 0.70819Austin 0.706

20Washington DC 0.70321Cambridge 0.69422Frankfurt 0.69223Seoul 0.68524Hamburg 0.68525Hannover 0.671

Top 25 cities across 20 of the world’s

Global Smart City Benchmarks

Source: The Business of Cities, ELO algorithm

o Adjust business climate and

institutions

o Address infrastructure gaps

o Tackle investment deficits

o Gear up for global

competitiveness

o Correct information and

coordination failures

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How do Cities foster an Innovation Ecosystem?

Policy Interventions

And what do Innovation Districts offer metropolitan

regions like Oslo?

1. Accommodate growth and change through redevelopment

(major projects)

2. Create new assets and destinations (co-location)

3. Improve quality and safety through collaborative self

management (area management and place-making)

4. Increase visibility, identity, reputation, experience (marketing

and activation)

5. Advance specialisation through eco-system adjustment

(services, protocols, accelerators).

AVERAGE

• So Innovation precincts ≠ innovation ecosystem

• Ecosystems operate at a whole-city, whole-region or larger geographies.

• Precincts concentrate some elements where close proximity and identity is needed.

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The relationship between Innovation Ecosystems and Districts

THE INNOVATION ECOSYSTEM

8 things that are NOT signs of the Innovation Economy

✖️Internationalisation and Commercialisation of Higher Education

✖️Basic research and scientific discovery

✖️Activity wholly funded by the Public Sector

✖️Drawing a map and allocating innovation to a location driven by supply of real estate.

✖️Focusing on one sector

✖️Fostering competition between locations in a region

✖️Venture Capital plays

✖️An Anchor + Aspiration 19

What does Everyone Need To Do to support

Innovation in a City’s Economy?

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Foster the eco-system

then

• Match the scale of ambition and resources to

the size of the location

• Invest in quality and depth of collaboration

between innovators, mentors, investors,

established business, and local leaders

• Put right management systems and

competences in place

• Anticipate how locations will ride the cycles

(access to ‘grow on’ space, relationships with

other locations)

• Build a total place perspective

• Proactively engage with local skills supply

and future skills demands

Create conditions for

location success

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What else is needed for the cities of the future?

Cities need a new deal with their national governments

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The Big City The

National

Government

National trade and supply

chain development

Net fiscal contribution to

national budgets

‘Escalator’ region to talent

and firms

Support and finance for

major projects

More devolved metropolitan

powers

Competitive tax and

immigration framework

Gateways for visitors

Access to global capital,

markets, processes, expertise

Improve ‘business brand’

for nations

Customisedhousing

market reform

Broker institutional

reform

Sectoral ministries

gain territorial

lens

Oslo

Oslo

The Success Model for Europe’s medium-sized cities

▪ Natural Beauty + ▪ Distinctive Lifestyle and Character + ▪ High Liveability (and affordability) + ▪ Diversified Jobs + ▪ Excellent public services and infrastructures + ▪ Urban vitality and vibrancy + ▪ Regional connectivity + ▪ Regional housing/lifestyle choices + ▪ Internationally oriented institutions (eg

universities, cultural orgs) +▪ Technological orientation + ▪ Scientific industrial specialisation + ▪ Entrepreneurial/innovation eco-systems + ▪ Collaborative leadership + ▪ Great story/brand

The promises of a smart, innovative city

Residents: liveable future for ambitious children

Visitors: global style, shared & safe city

Event hosts: real welcome plus serious minds

Investors: great fundamentals and access

Business: growing market with pro business climate

Innovation: knowledge on tap and space to grow

Real Estate: make your name and build your city

Leadership: inventing the 21st century city that the world really needs - partnership –

joint venture

Business Governments Universities

The implications for everyone to fulfil the promise of cities

Science, Tech and

ResearchCommunity Talent

Real Estate Owners

and Operators

Real Estate

Investors

Local and Regional

Governments

Appendix

Benchmarking Cities and the ingredients of competitiveness

What successful regional approaches share…

✓ Robust recognition of region’s strengths and proper auditing in relation to science & technology

✓ Rooted in ability to attract and retain science PLUS commercial capability

✓ Building an innovation and enterprise brand and promotion programme

✓ Finding mechanisms to do higher risk investments in tech-led businesses

✓ Co-ordination of government activity in terms of business climate as well as institutional frameworks

✓ Focus on livability, place-making, and talent attraction/retention.

✓ Identify and optimise anchors and catalysts

✓ Strategies that make innovation process more accessible to outsiders.

✓ Foster and encourage eco-system, NOT just picking locations