By 2050, the proportion of the world population living in cities is expected to rise to somewhere approaching 75%, up from just over half today. Already, cities are responsible for 80% of global GDP–and more than 70% of greenhouse gas emissions. Based on these numbers alone, it’s clear that the fate of humanity is inextricably linked to the fate of our cities.
Given how important they are, we know remarkably little about how cities actually work. Learning how to magnify the best aspects of city life–creativity, innovation, cultural fusion–while mitigating its worst side effects (crime, pollution, disease) is now a critical task. With this in mind, at Volans we set out– alongside the U.K.’s publicly funded innovation agency, Innovate UK–to explore the factors underpinning successful efforts to solve urban challenges.
We ran a series of workshops in cities around the U.K., bringing together public authorities and private companies (particularly startups). The goal: to catalyze new collaborations, explore the role of business models in addressing urban challenges, and learn about the opportunities and pitfalls that face those on a mission to make urban life more sustainable.
We looked in-depth at a range of specific challenges, from improving air quality and the sustainability of the built environment, to making cities conducive to healthy living, particularly as the population ages. The thing these issues all have in common is that no single actor owns responsibility for fixing them. It can feel at times like the metaphorical buck stops nowhere.
The good news is that effective models of cross-sector collaboration are proliferating around the world. Based on our research and conversations with people tackling urban challenges, we identified seven principles that underpin successful transformation efforts.
PRINCIPLE 1: DEFINE A MASSIVE TRANSFORMATIVE PURPOSE
The term Massive Transformative Purpose (MTP) was coined in the 2014 book Exponential Organizations. The idea of using an MTP to motivate people is especially relevant for initiatives that pull together people and resources from different sectors.
An MTP can serve as the glue for disparate coalitions, enabling them to achieve impact that is greater than the sum of its parts. And by setting a transformative goal, as opposed to simply aiming for incremental improvement on the status quo, it also invites greater creativity. (For more on this, see our previous article on “the Breakthrough Mindset.”)
It’s unusual to hear city leaders talking in these terms, but the current dearth of serious political leadership at a national level has prompted some mayors to step into the breach. Bill Peduto in Pittsburgh is a prime example. A public Twitter spat with the President may be what shot Peduto to international fame, but it’s things like the city’s visionary OnePGH resilience strategy that make Pittsburgh a city to watch. The MTP? “To create conditions in which every resident can flourish in the face of challenges and every community can effectively respond and recover in any circumstance.”
PRINCIPLE 2: ALIGN INCENTIVES WITH OUTCOMES
Misaligned incentives are probably the number-one reason why complex problems go unsolved. No matter what sector you work in, the norm is to incentivize outputs, not outcomes. This is, in part, because most of our contemporary management practices were developed in the era of mass production. If you’re in charge of a production line, focusing on outputs makes sense; when your goal is to improve the health and well-being of a whole city, it can be seriously counterproductive.
Social impact bonds (sometimes referred to as pay for success financing) are one tool that can help align incentives with outcomes. The spread of “product-as-a-service” business models is another. From Philips Lighting’s “pay-per-lux” model to Kaer’s “air-conditioning-as-a-service” offering, the common feature is that the customer now pays for the product’s performance, rather than the product itself.
PRINCIPLE 3: MAKE YOUR INNOVATION PROCESS AS OPEN AS POSSIBLE, AS EARLY AS POSSIBLE
You cannot predict where breakthroughs will come from, because true innovation is based on unexpected connections between people and ideas. Yet most innovation processes–even supposedly open ones–are highly prescriptive, with outsiders only invited in after key parameters have been decided.
Challenge Prizes and Startup in Residence (STIR) programs are two mechanisms that cities are starting to use to truly open up the way they do innovation. Since being piloted by San Francisco in 2014, the latter has spread to 11 U.S. cities–with copycat initiatives also up and running in Canada and the Netherlands.
PRINCIPLE 4: COLLABORATE WITH OTHER CITIES TO AGGREGATE DEMAND
Today, thanks to groups like C40, 100 Resilient Cities, and Apolitical, there are ample opportunities for cities–and public servants–to share knowledge and best practice. Now we need to go one step further, enabling cities to come together around common challenges and create a joined-up global market for innovation.
PRINCIPLE 5: LEVERAGE UNDERUTILIZED ASSETS
It’s a quirk of the human psyche that we tend to fixate on what’s scarce rather than what’s abundant. In public administration, there’s no two ways about it: Funding is scarce. But, too often, the realities of financial austerity blind us to the wealth of other assets that we’re failing to optimize.
Open Data platforms, such as London’s DataStore, are one example of cities opening up non-financial assets to enable new value creation opportunities. The DataStore contains a range of urban data–from house prices and transportation patterns to crime rates. More than 400 smartphone apps have been created based on London’s transport data alone, Citymapper being the most globally successful.
But it’s not all about data. Real estate is another source of opportunity: Repowering London installs solar panels on council-owned rooftops; its sister project, Energy Garden, turns railway platforms into community gardens. And circular economy platforms like LOOP are springing up in many cities to help turn waste materials into a resource.
PRINCIPLE 6: CO-OPT SERVICE USERS AS SOLUTION CO-CREATORS
Cities will never become truly sustainable unless we break down the distinction between producers and consumers of public goods and services. The goal, as Agamemnon Otero of Repowering London puts it, is for every citizen to become a “prosumer,” playing an active role in co-creating the outcomes they want.
Design for Social Change is one platform designed to enable just that. As their website puts it: “When it comes to transforming cities, what better source of information could there be than the people who walk its streets, jog through its parks, send parcels from its post offices, ride its buses, and spend money at its local shops?”
PRINCIPLE 7: DESIGN SOLUTIONS THAT CAN SCALE EXPONENTIALLY
This is the holy grail: to leverage the power of networks, platforms, and automation to create solutions that scale exponentially. This is the genius of so-called sharing economy businesses like Uber, Lyft, and Airbnb: Whatever you may think of their overall social impact, there’s no denying the impressive speed with which they’ve grown.
The challenge now is to take the best of what some of these platform businesses have achieved–scalability–and overlay it with business, financing, and governance models that are regenerative and distributive, rather than extractive.
Richard Roberts is the project breakthrough lead at Volans. His work focuses on the role of new mind-sets, technologies, and business models as enablers of sustainable growth.
Jacqueline Lim is a research and special projects manager at Volans. She leads on the Breakthrough Cities program with Innovate UK.