Best

Pushing Meaningful Innovation for Cities onto the Fast Track

Cities have always been the natural accelerators for experimentation, change and progress, always attracting those seeking opportunity and personal fulfillment. Like other complex systems, cities to-date have escaped our desire to fully understand, model or predict them. They do not follow the rational laws of nature alone, but are the space in which many forces negotiate their co-existence.

In short, if innovation is change, there isn’t a city that doesn’t innovate. Yet, in our modern urban societies expectations today are beginning to be more articulate and intentional.

Explosive expectations…

In a world where Amazon delivers within a few hours, where Twitter provides a real-time infrastructure for political expression and where more than 50 million drivers collaborate through Waze to help each other through traffic we simply have come to expect our cities to change faster, and deliver more value to our diverse personal aspirations.

In the words of our citizens, this may be expressed as “I expect my problems to be solved fast”. As we have learned to appreciate the value of innovation in solving problems in our private lives, and celebrate innovators like Steve Jobs even in children’s books, we expect the same to happen in the urban environment around us. But we we have also become pickier: solutions should not undermine opportunities for others, should not be inferior to those available elsewhere or damage the eco-system.

Our desire for innovation is expressed in the choices we make - whether it is at the ballot box, what we apply our talent to or by disrupting established urban rules by choosing services like Uber or Airbnb - fuelled by an entrepreneurial and technological ecosystem that has been radically democratized and accelerated.

…meet complex systems

On the flip-side of these truly explosive expectations are the established services and organizations that deliver many of the critical services in our communities. Most of these were conceived for a world in which a city was an island, defined by monopolies of local information and infrastructure systems and layers of obligations, regulations and contracts built up over generations.

Often big and complex, these services and organizations are certainly where the ‘big money’ of city government goes. Together, local governments around the world spend over 10% of world GDP, or USD 4.5 trillion, a year. Yet, most investors in urban innovation start-ups will tell you they prefer business models that work around, rather than with these systems.

Why meaningful innovation lingers on the slow track

As a result, we now live in a 2-speed urban world where solutions that require institutional collaboration scale at a fraction of the speed as solutions that don’t. And given the flows of venture capital and complexity of deal-making with city governments or agencies, we can expect fast to only get faster, and slow to remain a business proposition not for the faint-hearted.

To illustrate this point, let’s reflect on a simple question: “What are my chances of getting the best innovation to improve my life?”

A good way of looking at this is to understand how some solutions have become available in cities within 5 years of conception. Clearly, a solution available in more cities is more likely to be available to me quickly.

Solutions availability vs need for local institutional collaboration

Solutions availability vs need for local institutional collaboration

It is notable that there is a direct co-relation between the level of local institutional collaboration a solution requires and its ability to scale rapidly. This is not news, but can we as citizens really accept that innovations are only within our reach if they do not require our local governments, business, agencies or regulators to be involved? Can we accept that the evidently most meaningful solution on the above table, the navigation system for the blind, is not going to be available in our cities?

In short, the question of innovation in cities is not just one of change or progress, but raises questions about who innovation is meant to serve and what problem it is meant to solve. And this is where we see a painful divergence between the needs of communities (meaning) and those solutions that the marketplace today is able to deliver at scale.

How can we sustain meaningful innovation in cities?

We formed Citymart 5 years ago to deliver such meaningful innovation in our cities, by transforming the way cities solve problems. Working with 58 global cities on solving more than 100 problems we have learned the importance of involving and supporting the institutions and services that have traditionally proven to be harder to change.

Cities can take leadership and sustain meaningful innovation when they collaborate to create opportunities for change.

Firstly and foremost, we need to revisit some of our assumptions as a society as to who does what. In our fast changing world we cannot expect anyone to just fix things for us or that size alone is the answer. Each and every member of our community - citizen, business or organization - has to be empowered to participate in solving problems. Unless change is a collaborative effort of tackle problems, we are not able to make innovation meaningful in our cities.

Secondly, it requires institutions like city governments to make problem-solving their primary business. Sounds obvious, but in a survey of 50 global cities in 2012 we found that none had an explicit mission or method to solve problems and that 80% responded that they only trust solutions from companies they already know. This is why programs like Sheffield Smart Lab or Breakthru Long Beach are important in formally providing a path to tackle problems in the city, and breaking down the barrier of trust with start-ups that have the innovations that can make a noticeable difference.

Thirdly, measuring progress will sustain innovation. Unless we size-up our problems, we will not be able to measure the economic opportunity of solving them or creating the appropriate reward system. What value do we place on achieving our environmental goals, what value does the integration of a disabled person in the workplace have? Too many times we simply celebrate that something new is happening, rather than tracking the progress we make in accomplishing the goals we set out to achieve, to then immediately look to innovation to take us forward.

Yes, it is beginning to happen.

The good news is, many cities are already doing this. Global cities like New York City, San Francisco, Philadelphia and Barcelona that are transforming the way they solve problems, involving citizens and entrepreneurs alike. In the process, they are turning complex systems like adult social care or urban lighting, or processes like government procurement on their head to more immediately serve their mission of improving the lives of their citizens.

Cities are supported in this transition by a growing eco-system of organizations like the 100 Resilient Cities Initiative pioneered by the Rockefeller Foundation and What Works and other government innovation programs by Bloomberg Philanthropies help drive the systemic and institutional change toward a more intentional and explicit agenda and marketplace  for change. Building the new practices, measuring progress and using evidence as the basis for shared learning are the underpinnings tackling the risks of meaningful innovation falling behind in today's marketplace.

Are cities getting it all wrong in public management risk?

I often ask myself if our definition of risk in city management is causing a systemic failure for the world's urban population?

Risk in public management is today overly defined by process-risk with legal consequences - either by breaking procurement laws, disadvantaged competitors seeking litigation or public scandals of government waste.

We overlook the real risk - of doing the entirely wrong thing.

#citiesshare Peer Learning in London - placing the citizen at the heart of procurement

#citiesshare Peer Learning in London - placing the citizen at the heart of procurement

When is the last time local media has reported on a city government solving a problem in the wrong way, as compared to the usual outrages about cost-overruns or mal-functioning solutions.

Instead of debating the alternatives, we complain about the bureaucratic faults in delivering what usually amounts to the same old solutions. This fault line runs right through our communities - in the way we manage our administrations, the way local media reports on what is wrong rather than what could work better, and our expectations as citizens that someone else is going to fix things.

Risk for government should equal risk for citizens

Local governments spend 10% of world GDP as trustees of citizen taxes with the sole purpose of improving lives. As such, our city administrations have a powerful mandate and unequalled accountability as it is their spending and regulatory decisions affect us most.

As societies democratized, regulated and became more transparent, self-righteous government gave way to more accountable, transparent and professionalized bureaucracies that adhered to rules and introduced measures to protect in particular the process of public procurement against manipulation.

Yet, with professionalization we also saw the rise of the career politician and public servant, often incentivized by job security to inspire loyalty to the citizen and provide counter-incentives to the temptations of corruption.

"No one has ever been punished for putting too many conditions and clauses in a public contract."

But this professionalization may have also detached public servants more and more from citizens and their needs.  This can best be understood by looking at how city governments around the world define risk in procurement. Most government tenders (or RFPs = Requests for Proposals) are constructed around concepts of bureaucratic risks. By this, I mean the transactional risk in contracting that might expose the bureaucracy to liabilities, blame for mistakes or failure.

If you make the short exercise of grouping the risks in government procurement into risks to the citizen and risks to the administration you are likely to get a more balanced view:


Risk to quality of life for citizen

Best solutions are missed

Re-invention

Solution does not deliver impact

User / citizen rejects solution

Best vendors not interested

Effects

Under-performing services, over-spending

Delay in deployment, over-spending

Under-performing services

Failure, costly re-build

Under-performing services, citizen rejection, delays


Risk to administration

Insufficient vendor capacity

Solution failure liability

Cost overruns

Internal resistance

Effects

Deployment delays

Unpredictable cost-overruns

Delays, over-spending

Poorly scoped solutions, delays, citizen rejection, no impact delivered


In a political and bureaucratic culture where failure is not tolerated, it is natural that those risks affecting the administration are those associated with professional blame, litigation and scandals, and therefore tend to take top priority. They have also created their own culture of experts and professionals, often attracting talent that excels at avoiding bureaucratic risk first into procurement positions.

Who then mitigates the risks of not creating citizen value?

Putting the citizen first in procurement requires empathy first and foremost. If we reduce procurement to an exercise in bureaucratic risk management, we undermine the purpose of city government spending - to create value for citizens. It requires a culture change in which the risk of not using our resources to get the best solution to our citizens is valued highest.

City leaders can take a range of measures to mitigate the risks of not getting the most citizen value out of procurement - none of them create additional risks to the administration, but more likely strengthening the bureaucratic risk position also.


Action

Procure by publishing problem statements instead of design specifications

Proactive market research and engagement

Transparency and citizen participation

User-friendly processes

Careful risk planning

Pay for impact / performance

Effect

More solutions presented, more competition, eliminate re-invention, focus on problem throughout the process

Reach all possible solutions, recruit more bids, engage hard-to-get vendors

Share market research, promote debate about solutions to allow citizens to reject solutions before costly deployment

Lower the barriers to bidding to an absolute minimum to broaden the possible vendor pool including small-businesses, citizens or start-ups

Give fair chance to small businesses or disruptive approaches

Shifts risk to vendors and maximizes incentive to invest in problem-solving


And why would this happen?

It is happening already. A growing number of cities are actively changing both the culture and process of procurement to create more value for the citizen.

Cities like Barcelona, Philadelphia and San Francisco have found that using problem statements instead of specifications in their procurement process, lowering the barriers to vendors and investing in market research and communications is paying tangible dividends.

  • Costs are driven down by opening procurement to a wider solution and vendor-base. Barcelona and San Francisco found dozens of vendors compete to solve problems that in the past had just a handful of qualified vendors.
  • Citizens and entrepreneurs get more engaged. A recent $1,5 Million RFP by the city of Barcelona (maximum contract size $250,000) attracted 55,000 visitors of the RFP page in just 3 weeks through a coordinated local and global outreach campaign.
  • Philadelphia is accelerating a new crop of urban solutions through its FastFWD start-up accelerator program, integrated into a broader vision of a more responsive and open procurement system.

In just four years Citymart has helped more than 50 global cities to publish problem statements to find the best solutions to match their community needs learning about entirely new approaches to solving their problems that offer more value at lower cost.

A stupid question can go a long way

Most successful innovators are experts at reframing risk – often breaking down a seemingly unchallengeable risk into manageable pieces that allow new value to be created. Who would have invited strangers to sleep into their home before Airbnb or Couchsurfing turning our perception of trust on its head?

Changing risk frameworks doesn’t just require experts, but common sense and a clear sense of priority for citizen value which helps us ask the challenging question “why”?

  • “Why” can only companies with $10 million annual revenue or more present solutions? Will that really help the citizen or exclude too many new ideas?
  • “Why” are we really certain when we specify a solution that we know it doesn’t already exist, or that a better alternative may be out there somewhere?
  • "Why" do we need to buy a solution? Can we not lease it, give a concession or pay for the results achieved?

Each of these questions alone (and we ask many others every day) can transform the outcomes and results for the citizen. Most often, no one is asking them – so go ahead, and do it.

#citiesshare Session 4: Delivering innovation in cities

Cities aim to foster innovation, and yet, organising internal processes to actually deliver does not seem straightforward. During a peer learning session, James Anderson, Head of Government Innovation Programs at Bloomberg Philanthropies, and Philip Colligan, Deputy Chief Executive of Nesta, challenged global cities' representatives on what assets could be mobilised to make innovation a tangible reality. 

As an introduction to the session, Philip Colligan presented recent research that has identified four types oiTeams (innovation teams, units or funds) that make innovation happen in local and national governments around the world:

  1. Developers – creating new solutions to specific problems/policy priorities (from idea generation to delivery).
  2. Enablers – engaging citizens, NGOs and businesses to find new ideas (e.g. using challenges to make government an innovation platform to generate and run ideas, engaging SMEs, reaching to business /non-profits via challenges, etc.).
  3. Educators – looking at and changing culture of governance from a broader and deeper perspective, transforming processes, skills and culture of government  (up-skilling civil servants, training, consultancy).
  4. Architects – situated outside government but paid by government, thinking on macro-level, wider policy and system change.

City officials were asked which of those approaches resonated the most with cities, and whether there was a fifth type of team for innovators that could help them adopt or design in-house capacity.

What did city officials take away from this session?

  • Enthusiasm for innovation has moved beyond our capacity to measure it. Too many people are busy re-inventing things; yet we must get better at accounting for investment into innovation. E.g., hold competitions not based on app quality but on impact.
  •  Innovation teams that survive administrative shifts are the ones who measure and demonstrate impact data, while those that survived and didn’t measure, were good at describing their minimum value proposition. 
  • Get the Mayor or CEO of the city to champion the team. The Chief Executive’s role seems central to create an enabling environment, provide political support and foster a positive innovation climate. 
  • Leadership drives behaviour and is key in all levels to make innovation possible –it can be an enabler or a barrier.
  • Innovation teams do not need to be a permanent fixture. They can –and sometimes should– have a short-term mission.
  • The role of cities is to provide assets for innovation, and the number one asset is open data. However, data should be collected and stored in useful ways, such as for economic development.
  • Cities need to bridge the gap between public and private sector to benefit from the skills and expertise of industry. This can be accomplished by building partnerships between cities and other institutions to access knowledge. E.g. enablers are open to ideas outside government, such as teaming up with universities, like in Newcastle and Krakow.
  • City leaders are interested in better ways of connecting with peers in other cities, finding out what they are doing and how they are adapting and managing change. E.g. moving from pilot to scale.
  • Examples presented by city officials included: the Mayor of London Low Carbon prize; Dublin’s adoption of “Code for America”; the introduction of GIS in San Luis Potosi (Mexico) fighting management resistance; the design lab to educate civil servants in Sweden; Moscow’s Center for Innovation Development to close the gap between government and entrepreneurs; open innovation and engagement in York. 

What else should local governments do to deliver innovation? Share your insights below. 

_______________________________________________________________________

From 23-25 June 2014, Mayor of London Boris Johnson hosted Cities Summit | Solutions Worth Sharing together with Citymart and supported by Citi. The Summit brought together city governments, businesses and entrepreneurs with bright ideas to help improve citizens' quality of  life. The Summit kicked off with a Peer Learning Session for cities, creating a dynamic dialogue among city officials around four key themes on how to make innovation a tangible reality. Participating cities included London, Barcelona, Dublin, Fukuoka, Heerlen, Kristiansand, Krakow, Lobito, Louisville, Madrid, Malmö, Moscow, Newcastle, Philadelphia, San Luis Potosí, Sant Cugat, Seville, Sheffield, Tampere, Tartu, Valencia, and York. 

Check out the entire #citiesshare series in our blog for the contents of the other sessions. 

#citiesshare Session 3: Overcoming procurement barriers

How to overcome the hurdles in public procurement? Filipo Sabatini, Managing Director at Citibank, and Adrian Walker, Global Co-Head of Hogan Lovells Infrastructure, Energy, Resources and Projects, facilitated a session with city officials on how to prevent jurisdiction from becoming a barrier to innovation procurement. Representatives of global cities exchanged ideas on how to adopt the best solutions to enhance public services and citizens' quality of life, while respecting the rules.

City officials discussed the following ideas on how to make public procurement less prescriptive and more collaborative:

  • Rules and regulations can be positive. There are two options: 1) de-regulation for innovation with a supporting infrastructure, or 2) new regulation to support SMEs through innovation partnerships.
  • Overregulation cannot guarantee better procurement; hence, it is necessary to make compromises between regulation and solutions. It is hard to innovate when validation and proofs are required.
  • It is important to explore problem areas and not just solution areas, and avoid prescribing technology.
  • Rules can help or hinder. Legislation, especially at national level, can become an excuse for doing things in the same way. On the other hand, new deal structures can lead to more flexible interactions.
  • Fear is the biggest barrier of innovation, followed by conservative, defensive attitudes within leadership. It is important to find your champion and change the mindset to overcome conservatism and inertia. Show good examples from other cities when you have to deal with a conservative leader, and understand that some environments are more prescriptive than others. The best way to convince a city to do it differently is to show that another city has already done it successfully.
  • Departments and teams should work together, and there should be open conversations between the legal and procurement teams.
  • Meet and learn from other cities. Find out how other cities procure and learn from their experience, mistakes, and successes. Cities can help each other by sharing positive examples and welcoming private sector expertise. Embracing and learning from failure is essential.
  • Governments look at innovative management and finance models, such as innovative procurement and PPPs, although risks are still perceived. Part of the future procurement challenge will be to stimulate wider market appraisal. Invite another level of government (e.g. central or regional government) to make the process multilateral and encourage market development.
  • Specific examples provided by city officials included: using regulation to avoid corruption and to increase transparency (Moscow); asking the market for solutions and conducting market consultation for up-to-date technology (Eindhoven); including social considerations and value (Malmö); providing opportunities to SMEs through legacy projects (London).
  • Regarding the key issue of scaling solutions, Barcelona considers important to have a fixed budget to spend on innovative solutions. In Japan, procurement processes are deregulated which has increased flexibility and speed, thereby leading to greater competitiveness. In Philadelphia, a new approach has been introduced to invest in exploration and look into problem areas.

 In conclusion, it is important to fast-track innovation, and allow test & scale in procurement.

Join the discussion by leaving a comment below. 

_______________________________________________________________________

From 23-25 June 2014, Mayor of London Boris Johnson hosted Cities Summit | Solutions Worth Sharing together with Citymart and supported by Citi. The Summit brought together city governments, businesses and entrepreneurs with bright ideas to help improve citizens' quality of  life. The Summit kicked off with a Peer Learning Session for cities, creating a dynamic dialogue among city officials around four key themes on how to make innovation a tangible reality. Participating cities included London, Barcelona, Dublin, Fukuoka, Heerlen, Kristiansand, Krakow, Lobito, Louisville, Madrid, Malmö, Moscow, Newcastle, Philadelphia, San Luis Potosí, Sant Cugat, Seville, Sheffield, Tampere, Tartu, Valencia, and York. 

Next post will cover how to organize and deliver innovation in cities. 

#citiesshare Session 2: Sharing solutions

Why are good solutions not spreading more quickly across cities? Scott Cain, Executive Director at Future Cities Catapult, and Sascha Haselmayer, Citymart CEO, challenged city officials during a peer learning session to ask themselves how good solutions could scale faster.  City officials were asked if they had bought or “copied” a solution from another city, instead of reinventing their own. One of the ideas stressed during the session, was the importance of embracing failure and learning from mistakes.

What did city officials take away from this creative session?

Sharing and borrowing ideas (or shameless “stealing”)

  • Take something that works 90% and improve it rather than trying to (re)invent something from scratch that is 100% right.
  • Collaborate: find partner cities and work together.
  • Political transitions can be complicated, but sharing can be enabled by political change (post-mayoral legacy), not for political gain.
  • Being a first-mover city means making more mistakes, and there is often political risk involved.
  • Define a process to collect bottom-up data.  
  • Solutions are not always transferable. It is important to adapt and align, taking the key elements, and analyzing the ability to implement it (considering organizational challenges, resources, economic environment, and citizens).
  • Seek innovation through start-ups, create capabilities and provide training to align departments. 

Embrace failure

  • Cities never talk about bad ideas or experiences, however, this information should be shared. Learning from what did not work minimizes risk. City officials should get together to discuss.
  • Open and honest sharing of failure (“permission to fail”) should not only be acceptable, but part of the scaling process. As an example, in Philadelphia, one out of three projects is expected to fail. It is important to agree on an acceptable amount of risk and failure.
If we do not fail we are not trying enough

Buying ideas and spending on scaling

  • Beware of provider “lock-in”. Cities are supersaturated with vendors all claiming to have the “best” solution, and it might become too overwhelming to choose one solution and be sure it is right.
  • In a snap survey in which cities were asked what percentage of annual budget they should spend on sharing solutions, all agreed that at least part of their annual budget should be allocated to this purpose (answers varied from 10 to 60%).

Creating a common framework for evaluation

  • Cities need a more coherent framework that focuses on their needs, starting with problem definition and service delivery.
  • Think fast-follower: see solutions and learn why they worked; let others make the mistakes and learn from them.
  • Evidence and KPIs: identify and engage what can deliver and measure priorities. Proven ideas bring more efficiency.
  • Consider the viewpoints of citizens on how to create trust and validate ideas.  Their opinion should be represented and they should be involved in identifying challenges through open innovation platforms.
  • It is important to break silos. You could either nominate and train a high-level team of “barrier-busters” as a “coalition of the willing” that can break down the silos between different departments through collaboration, or invite anyone that wants to join to a crosscutting innovation forum.
  • Change attitudes from “Nice idea, but it wouldn’t work here because…” to “Nice idea! Here’s how it could work here…”

What else can be done to share high-impact solutions among cities? Share your insights below. 

_______________________________________________________________________

From 23-25 June 2014, Mayor of London Boris Johnson hosted Cities Summit | Solutions Worth Sharing together with Citymart and supported by Citi. The Summit brought together city governments, businesses and entrepreneurs with bright ideas to help improve citizens' quality of  life. The Summit kicked off with a Peer Learning Session for cities, creating a dynamic dialogue among city officials around four key themes on how to make innovation a tangible reality. Participating cities included London, Barcelona, Dublin, Fukuoka, Heerlen, Kristiansand, Krakow, Lobito, Louisville, Madrid, Malmö, Moscow, Newcastle, Philadelphia, San Luis Potosí, Sant Cugat, Seville, Sheffield, Tampere, Tartu, Valencia, and York. 

Next post will cover how to overcome public procurement barriers.

#citiesshare Session 1: Financing innovation

During a peer learning session for city officials, Daria Kuznetsova from Big Society Capital and Paula Hirst from Future Cities Catapult, facilitated a dialogue on how to finance ideas that transform tomorrow's cities. The key question was how city authorities could enable an ecosystem that provided finance and support to city innovation.

The key takeaway was that cities needed to create investment-conducive ecosystems for innovation. This can be done by designing service delivery around users and engaging them in the process; providing support to SMEs; running challenge-based opportunities; and establishing incubators.

Another learning outcome was that cities should become an entrepreneurial enabler that encourages confidence, providing clarity and opportunities. Local authorities acting as entrepreneurs could work with big and small investors; meet directly with all investors and decision makers; co-invest; create guidelines or frameworks; enable external funding through multiple channels and mechanisms; and provide finance to the most innovative ideas.

City officials shared the following  ideas on how to finance innovation in cities:

  • Pay by result: outcome-based finance mechanisms can support and deliver service innovation. While providers benefit from greater freedom due to public-private shared risk, it might be difficult to negotiate or might face certain regulatory restrictions.
  • Open challenges followed by implementation through an innovative process: discovery + prototype + deliver, as well as prize fund challenges providing incentives such as access to capital finance.
  • Open city data to unveil assets, encourage ideation, and find out how to quantify future revenue.
  • Participatory design providing shares for citizens.
  • EU investment and sustainable benefits (e.g. low-carbon programmes, improving waste management).
  • Fast-track innovation through procurement.
  • Refinance existing service contracts to lower costs in order to obtain funds to invest in city services.
  • Venture funds for city service delivery.
  • Citizen-led social funding and foundations for innovation.
  • Increase diversity of providers and get major suppliers to use SMEs via supply chain.
  • Finance cultural activities for the community.
  • Social start-up to work for the government.
  • Mass market funding, which might involve more risk and have no return, but creates research value.
  • Private investment with a long-term return, sponsorship and angel investors.
  • Sell shares and invest revenue.
  • Rethink taxation systems.

What other ideas could help enable ecosystems that support city innovation? Share your insights below.

_______________________________________________________________________

From 23-25 June 2014, Mayor of London Boris Johnson hosted Cities Summit | Solutions Worth Sharing together with Citymart and supported by Citi. The Summit brought together city governments, businesses and entrepreneurs with bright ideas to help improve citizens' quality of  life. The Summit kicked off with a Peer Learning Session for cities, creating a dynamic dialogue among city officials around four key themes on how to make innovation a tangible reality. Participating cities included London, Barcelona, Dublin, Fukuoka, Heerlen, Kristiansand, Krakow, Lobito, Louisville, Madrid, Malmö, Moscow, Newcastle, Philadelphia, San Luis Potosí, Sant Cugat, Seville, Sheffield, Tampere, Tartu, Valencia, and York. 

Next post will cover how to share and scale good solutions among cities.