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Urban Challenges: The Way Forward

Gerard M. Mooney

IBM Corporation

ABSTRACT

Cities are often the largest contributor to a country’s GNP. Current high unemployment, languid economic growth, and growing urbanization make cities’ role in driving growth more important than ever. Governments need to accelerate the development of common standards for new solutions and open data, industries need to collaborate across industry boundaries, and cities need to continue to build smarter. “Smarter cities” use instrumentation, interconnection, and intelligence to provide awareness of and coordinated responsiveness to activities and events. Interconnected technologies are changing the way the world literally works, and cities are the brightest opportunity to begin working toward a smarter planet.

INTRODUCTION

A city can be viewed as a complex system of systems, and the integration of these systems is essential for growth and job creation. Good urban planning strategies—manifested in neighborhoods that promote walking and bicycling and quality transit—are the foundation for livable cities. But cities also need to be infused with new capacities such as information technology (IT) and analytics to help make them smarter.



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114 LIVABLE CITIES OF THE FUTURE Urban Challenges: The Way Forward Gerard M. Mooney IBM Corporation ABSTRACT Cities are often the largest contributor to a country’s GNP. Current high unemployment, languid economic growth, and growing urbanization make cities’ role in driving growth more important than ever. Governments need to accelerate the development of common standards for new solutions and open data, industries need to collaborate across industry boundaries, and cities need to continue to build smarter. “Smarter cities” use instrumenta- tion, interconnection, and intelligence to provide awareness of and coordi- nated responsiveness to activities and events. Interconnected technologies are changing the way the world literally works, and cities are the brightest opportunity to begin working toward a smarter planet. INTRODUCTION A city can be viewed as a complex system of systems, and the integration of these systems is essential for growth and job creation. Good urban planning strategies—manifested in neighborhoods that promote walking and bicy- cling and quality transit—are the foundation for livable cities. But cities also need to be infused with new capacities such as information technology (IT) and analytics to help make them smarter.

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SUSTAINABILITY, IT, AND ENVIRONMENT 115 At the October 2012 EUROCITIES Knowledge Society Forum in Vienna, however, an astounding point was made. According to a member of the European Commission Intelligent Transport Systems Department of the Directorate-General for Mobility and Transport, although the commission developed many pilot projects across Europe over the last two or three years, not one was scaled or replicated. It is extremely important to know what works in order to understand what to scale. Tools are needed to measure impact and determine what needs to be developed to make cities and systems more efficient and effective. CHALLENGES In the globally interconnected business and IT world, natural disasters, fail- ures of large-scale systems, and malicious threats highlight the complexity and fragility of systems, whether natural or developed for global business and government operations. Moreover, as vividly illustrated in Figure 1, reported disasters/incidents have been increasing in recent years in both number and intensity. Acute Threats – Natural and Man-made Natural disasters, human error, cascading failures, and cyber-security aƩacks highlight the complexity and fragility of our global society, its businesses and infrastructure WW: Cloud Service Outage , 2011 Loss ~$5600/min Japan: Quake/Tsunami/ USA: Cyber-attack, 2011 Nuclear, 2011 Thailand: Flooding 2011 Loss ~$170M, Loss ~$200B, 30K Lives Loss ~$4 B, 550 Lives Personal information Global supply chain impact Auto and HDD are hit hard is stolen Loss of data 36 Human error 120000 Number of USA: Port Strikes, 2002 35 100000 incidents Loss ~$15B 80000 System failure reported to Retail and supply chain 31 60000 US-CERT disruptions Supply chain disruption 29 40000 Iceland: Volcano, 2010 Virus, worm or other malicious attack on IT systems 20000 Loss ~$1.7B 28 0 10M Passengers affected Employee malfeasance, e.g. theft or fraud 2005 2006 2007 2008 2009 2010 25 (Source: US-CERT) Natural disasters, such as fires or floods 22 Unplanned downtime of online systems Estimated damage 22 $200B China: + 37 countries, Terrorism caused by Australia: Bushfires, 2009 SARS, 2002-2003 16 reported natural Loss ~$4B, 173 Lives Types of threats Loss ~$15B, 916 Lives Power outage disasters 13 most important Major workforce Pandemic for operational 13 disruptions Application failure risk management 12 planning Industrial action (% respondents) 8 1900 2011 Source: Economist Intelligence Unit survey (Source: EM-DAT) FIGURE 1  Acute Threats, Natural and Man-made

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116 LIVABLE CITIES OF THE FUTURE FIGURE 2  Chronic Resource Stresses: The Stress Nexus In addition, the growth of populations, shifts in the balance in eco- nomic status of individuals and nations, political instability, migration, and environmental changes are leading to constraints on basic resources such as water, food, and energy. This “stress nexus,” as shown in Figure 2, is limiting economic development in many places around the world. All of these threats, both natural and human-generated, make the chal- lenges of sustaining cities that much more difficult. To avoid succumbing to these threats and challenges it is essential to deploy smarter infrastructure and invest in resiliency and sustainability. THE LEADERSHIP ROLE OF CITIES Cities are often the largest contributor to a country’s GNP and, because of their importance, must determine what investments to make in order to become world-class and compete globally. A city’s economic engine (Figure 3) can be identified by the types and quality of infrastructure. City leaders also need to decide what their city

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CHALLENGES: THE WAY FORWARD 117 FIGURE 3 A City’s Economic Engine should be—determine its “brand.” The first step in this process is to articulate the city’s high-level objective, in terms of economic and social competitive- ness, by • identifying the city’s differentiating strengths that will attract skills, knowledge, and creativity; • creating a strategy that emphasizes these strengths while building on potential capacity; and • prioritizing investments in core systems such as transport, govern- ment services and education, public safety and health, energy, envi- ronmental sustainability, urban planning, and design aligned with the strategy. A city’s policies should be conducive to skills, creativity, and knowledge- driven growth, as shown in Figure 4. With the growing importance of these attributes in the global economy, it is critical that cities create an environ- ment that supports and promotes them. Such an environment

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118 LIVABLE CITIES OF THE FUTURE Cities need to adopt policies conducive to skills, creativity and knowledge-driven growth Retain Attract the existing base of internationally education, skills, creativity, business investment & and aptitude to reduce talent by enhancing the brain drain quality of life & services People, skills, knowledge and creativity Enable Create better opportunities for a domestic skills and deploying skills and knowledge base by abilities, using better offering education deployment of data collection services and training and analytics Source: IBM Global Center for Economics Development analysis FIGURE 4 Components of Policies That Support Skills, Creativity, and Knowledge-Driven Growth • Attracts internationally mobile talent by enhancing quality of life services in line with changes in demand. • Creates a domestic talent base by offering education services and training and by investing in education infrastructure. Cities that invest in people through education and training have a higher- quality stock of skills, talent, and knowledge, thus improving their chances for greater prosperity. There is, for example, a strong posi- tive relationship between investment and enrollment in higher/ter- tiary education and level of prosperity and economic performance, even at the national level: estimates of the gain in income from an additional year of education range from 5 percent to 15 percent.1 In addition, empirical evidence suggests a link between education, R&D, technology adoption, and growth.2 1  Deutsche Bank Research. Available at www.dbresearch.com/prod/dbr_internet_en- prod/prod0000000000190080.pdf. 2  Benhabib J, Spiegel MM. 1994. The role of human capital in economic development: Evidence from aggregate cross-country data. Journal of Monetary Economics 34:143–173.

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CHALLENGES: THE WAY FORWARD 119 • Enables better job and growth opportunities for citizens by using data collection and analytics to identify changes in the labor force and skills supply and demand. • Promotes business and entrepreneurial investment to increase eco- nomic capacity to generate, absorb, and commercialize innovation and creativity. • Retains the existing base of talent to minimize “brain drain.” In international competition for skills, knowledge, and innovation, successful cities experience net inmigration—and less successful cities outward migration—of skilled people. For example, in the United Kingdom there are large inflows of graduates in London and the southeast whereas some cities in the north find it difficult to retain their graduates. Similarly, in former industrial cities of the US Rust Belt the decline associated with a deindustrializing economy has resulted in people leaving. BUILDING ON COLLABORATION: A SUCCESS STORY Industries, universities, and governments can work together to bring real economic development to cities and regions. For example, just a few hours north of New York City, IBM was involved in creating a world-class center for nanotechnology and microelectronics, Albany Nanotech. Figure 5 shows the basic strengths and needs of the project in each of the three sectors. The project brought together the local university, industry, and gov- ernment to create benefits to the region’s economy and employment. The government invested in the project, helping to underwrite not only the facility, which a number of microelectronics companies share, but also all of the infrastructure needed to support future research for that industry in the region. Before long this initiative attracted every major player in the indus- try to locate a research team at the facility in Albany. The expected—and achieved—results from the project are shown in Figure 6. Thousands of high-skilled jobs were created and people who had been doing research alone started working together. It was a solid success that required the collabora- tion of industry, university, and government.

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120 LIVABLE CITIES OF THE FUTURE FIGURE 5  Strengths and Needs of a Cross-Sectoral Collaboration: Albany Nanotech FIGURE 6  Aligning the “Output” Vectors

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CHALLENGES: THE WAY FORWARD 121 CLOSING REMARKS Today’s cities face a range of challenges and threats to their sustainability. Modernized capabilities, supportive policies, and cross-sector collaboration are the fundamental ingredients that build and enable economically viable smarter cities, enabling both residents and local industry to benefit from a great place to live, work, and run a business in a city that is adaptive, collab- orative, efficient, secure, supportive, and sustainable.