See how smart cities have evolved around multi-actor ecosystems

Digital platform

The first smart city initiatives were launched more than a decade ago, with technology companies blazing the trail. Major global tech firms, industrial giants, and telecoms have become providers of smart city systems and services. The roster has continued to grow over time as utilities, real estate developers, car manufacturers, and other firms spot opportunities to play a role. Policy makers around the world have embraced the smart cities concept and put funding into initiatives and pilot programs.

IBM introduced the concept of a “Smarter Planet” in 2008, and the company’s smarter cities initiative grew into a division offering hardware, software, and digital services to city governments. One of its well-publicized early projects was a high-tech command center in Rio that integrates data from more than 30 municipal and state agencies under one roof, with hundreds of screens monitoring transportation, water, energy, security, and other key operations.

Cisco was another early mover, developing digital platforms and solutions that have since been integrated into cities from Songdo to Barcelona to Kansas City. The company is now supplying technology to support ambitious national plans to make cities smarter across both China and India.

China highlighted smart city development as one of the major economic priorities in its 12th Five-Year Plan (covering 2011–15), and more than 500 cities across the country have already developed strategies or launched pilot projects.

The EU’s Horizon 2020 initiative, a €77 billion research and innovation program established in 2013, made smart cities an important part of the agenda. Soon after, India announced plans to create 100 smart cities. The US Department of Transportation launched a smart city challenge in 2015, encouraging cities across the country to submit innovative plans and compete for grant money. Around the world, governments have partnered with private sector companies to create purpose-built smart cities from the ground up.

The story of early smart city development has led many people to think that smart cities are simply local government agencies purchasing software to operate subway and security systems. But the reality has evolved into something broader and more collaborative. City governments do not have to provide every type of application and service themselves. There is room for private-sector companies, state-owned utilities, universities, foundations, and nonprofits to contribute. The ecosystem has become more intricate over time, with the degree and mix of private-sector participation varying from city to city.

Technology is reconfiguring traditional roles and divisions of labor—and in a smart city, people and private companies actively participate. This shift is particularly evident in new types of mobility systems. Many startups have launched city-based bike-sharing programs, sometimes with major corporate sponsorship as part of the business model. Traditional taxi services have been upended by the rapid growth of e-hailing services offered by Didi, Uber, Lyft, Ola, Yandex, and Grab.

These services have already had a more dramatic impact on the way people navigate cities around the world than many transit applications or planned initiatives. Ford recently acquired Chariot, an on-demand minibus service that cities can add to expand commuting options along routes that are underserved by public transit. Private-sector firms have also created a number of digital platforms that change the way residents experience city life. Social media and peer-to-peer platforms such as Nextdoor and Meetup provide new ways to form social connections in a city.

In some cases, digital innovation by the private sector got ahead of regulation. The rapid spread of digital platforms such as Uber and Airbnb, for example, has had major implications for the life of cities, and many have been slow to clarify their regulatory stances. Issues such as drone management and how sensor data will be used and protected similarly need regulatory attention. Residents themselves are ultimately the most important actors. Many smart city initiatives funded and launched by governments or the private sector succeed or fail based on whether enough individual users engage with them. Cities can implement new mobile apps for getting around, handling trash, conserving energy, and communicating with government agencies. But these systems only work with ongoing participation and cooperation.