The movement to make cities smarter is reshaping local governance all around the world. However, this is only one side of the tale. Smart cities represent significant revenue potential for businesses, not only tech corporations providing technology to government agencies.
Technology is reshaping traditional jobs and labor divisions. City governments are not required to provide every sort of application and service. They can’t, in fact, and this awareness opens the door for other groups with resources and the ability to step in, particularly where there may be income prospects. Smart cities have evolved into more complex ecosystems over time, with the degree and mix of private-sector participation changing each city.
Even if they do not become system or service providers, many businesses will need to adjust in some way as cities become increasingly digitally connected. Digitization has upended industry after industry. As it begins to reshape the settings that will house two-thirds of the world’s population by 2030, there is cause to expect another wave of disruption.
Numerous industries are already adapting their strategies to the new urban markets. Electricity companies are installing smart meters and implementing dynamic pricing strategies. Telemedicine kiosks are being added to pharmacies. Automated systems, sensors, and mobility alternatives are being integrated into the premises of real estate developers.
To run systems and applications, telecom providers provide backbone communication networks. Now, some companies are strengthening their existing connections with local governments and expanding into other areas of smart technology adoption, such as e-government. Telcos such as Telefónica and Vodafone have planted 12,000 sensors in Santander, Spain. As an example, other telecommunications companies offer smart parking and trash management solutions.
There are several new choices that automakers are adding to their vehicle portfolios for urban mobility. The use of e-hailing services is growing rapidly in cities worldwide, yet some segments of the population are still hesitant to use them. Introducing new vehicle models could help the concept gain traction with the general public as well. Business commuters, for example, could benefit from shared minibusses equipped with Wi-Fi, folding work desks, and privacy screens or headrests. In contrast, families with children and elderly or disabled passengers would benefit from flexible vehicles with easy entry, generous storage space, and reconfigurable seating.
To bridge the gap between taxis, shuttle vans, and buses for its planned on-demand micro-transit service Volkswagen has developed a brand new electric vehicle idea. Smart city solutions, such as load pooling and urban consolidation centers will also require commercial trucks.
A wave of public and private investors worldwide is going into making cities smarter. Most municipal governments are working with serious spending constraints. Companies that want to serve them directly often have to think outside the box regarding financing. Cisco has created a $1 billion program with its own capital as well as private equity. As cities get smarter, the value of urban properties will shift. E-hailing, on-demand minibusses, and eventually autonomous cars could raise land values. New opportunities for investment and development could open up if some formerly congested areas become more livable.
The ability to use data effectively will become a source of competitive advantage for retailers and other types of companies. Data on everything from pedestrian patterns and traffic to crime, school performance, and energy use can change the way properties are used and how they are valued. The range of possibilities has gotten bigger, and B2C or even B2G2C business models are growing more common. Cities have many vocal constituencies and stakeholders, whether direct customers or not. The public often has a great deal to say about smart solutions that shape their environment.
Businesses may fail to coordinate their go-to-market approaches when forming new multidisciplinary teams. Different business divisions of the same company may approach cities with uncoordinated pitches. Getting this right involves an often painful process of enforcing guidelines about mandates and responsibilities. The need to tailor solutions to each city’s context, combined with the unwieldiness of dealing with multiple stakeholders and agencies, has made it challenging for many providers to crack the smart city market. For companies, the trick will be balancing cities’ desire for custom solutions with their own need for scale.
To acquire a mandate to operate, businesses must evaluate how their offerings function and affect the public sphere. That mandate is important enough to preserve. After all, some of the world’s urban markets are the size of entire countries.