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Cities ride on government innovation to boost performance

Overview

Innovation and entrepreneurship have an important role to play in shaping the future of cities. City Initiatives for Technology, Innovation and Entrepreneurship (CITIE)—a partnership between Nesta, Accenture and the Future Cities Catapult—provides city policymakers with resources to help them develop policy initiatives that catalyse innovation and entrepreneurship in cities. This report is an introduction to the CITIE framework, analysis and results for 2015.

CITIE’s analysis of 40 cities globally shows that there are certain traits that high-performing city governments share:

  • They make sure that very different areas of policy need to work in concert.

  • They are open by default.

  • They employ styles of working that are more closely associated with start-ups than bureaucrats.

A new wave of businesses is changing how people interact with the city around them, through the creation of data-driven, location-aware and on-demand services. City governments around the world are starting to take action to capitalise on these trends. Our research shows policymakers in cities are using an impressive range of initiatives to create the right conditions for talent, ideas and businesses to flourish.

Five cities that currently represent best practice globally for 2015:

  • New York

  • London

  • Helsinki

  • Barcelona

  • Amsterdam

City governments must be open to new ideas that challenge the status quo and help stimulate innovation locally to compete globally.
Josep M. Piqué
CEO, Office of Economic Growth Barcelona City Council

Background

CITIE has identified that the approach a city government takes to innovation and entrepreneurship can be characterised by answers to the following three questions:

  • How open is the city to new ideas and businesses? High-performing city governments support insurgent businesses by ensuring that regulations, procurement rules and advocacy efforts work in their favour.

  • How does the city optimise its infrastructure for high-growth businesses? High-performing city governments invest in their transport and digital infrastructure, and support access to inputs such as talent and capital.

  • How does the city build innovation into its own activities? High-performing city governments take a clear view on how they want to support innovation, use data and engage with citizens.

CITIE has designed a framework that identifies nine different roles that a city can play to support innovation and entrepreneurship.

City governments can increase their openness to new ideas and businesses through their roles as Regulator, Advocate and Customer. They can optimise the enabling infrastructure for high-growth businesses in their roles as Host, Investor and Connector. And they can lead from within the city hall through their roles as Strategist, Digital Governor and Datavore.

Key Findings

In its 2015 analysis, CITIE has identified some trends on city innovation over the past few years:

  • High-growth companies create jobs: Growth is disproportionately driven by young, high-growth companies. Between 2002 and 2008, for example, just 6 percent of high-growth companies created 50 percent of the UK’s employment growth.

  • These are the jobs of tomorrow. Recent research predicted that 47 percent of US jobs are at risk of automation. Innovative high-growth companies are creating the skills and ideas that cities will need to compete in an increasingly digital global economy.

  • There is a growing feedback loop between entrepreneurship outside city halls, and innovative governance within them. Leading cities are now looking to engage with outside ideas and innovators to improve services and create new solutions to complex problems.

  • A new breed of companies are reshaping the way people interact with the city around them. Companies like Uber, Airbnb, Citymapper, Deliveroo and JustPark are bridging the digital and the physical with location-aware and on-demand services that create new ways for citizens to experience their city.

  • Many cities recognise the importance of innovation and entrepreneurship. A growing range of policy initiatives are being employed by city governments to foster entrepreneurship both in the private sector as well as innovation in the way the city delivers services.

Analysis

High-performing city governments play a variety of roles to support innovation and entrepreneurship, such as:

  • A regulator including innovative new business models into the local economy, while ensuring that regulations keep up with innovation and technologies. In 2014, Amsterdam created a new category of accommodation—Private Rental—which clarified homeowners’ rights and responsibilities for short-term letting.

  • An advocate helping local businesses, and enhancing its own business environment. Berlin provides soft landing support for businesses seeking to start out, operate and expand in the city.

  • A customer opening up procurement mechanisms and commercial opportunities for small businesses and local entrepreneurs. Helsinki’s Hack at Home concept uses a collaboration platform that brings developers and mentors together over a four-month period.

  • A host integrating the needs of young businesses into their development plans. Buenos Aires has been active in revitalizing areas of the city into innovation districts themes such as technology.

  • An investor using the resources at their disposal to invest in the supply of talent and capital. New York City is actively sponsoring technology apprenticeships for young people, as well as training teachers to deliver the classes.

  • A connector ensuring that both types of connectivity are as comprehensive and frictionless as possible. Paris has built up its physical cycling infrastructure into one of the largest in the world, while promoting free Wi-Fi at more than 260 public places across the city.

  • A strategist establishing innovation teams and leadership positions that provide integration to all policy initiatives. Seoul is promoting a Sharing City where citizens can use social media to engage with the development of their public services.

  • A digital governor using digital channels to interact with citizens in convenient ways and on citizens’ own terms. Qlue is Jakarta’s crowdsourcing app with which users can report incidents such as natural disasters.

  • A datavore turning big data into smart data, by using it to optimise services. The Amsterdam city dashboard draws on open data to create a single dashboard accessible to everyone.

Recommendations

While the CITIE analysis shows a rich diversity of approaches to catalysing innovation and entrepreneurship, there are a few common characteristics of high-performing cities that others can draw inspiration from:

Making sure that different areas of policy work in concert. Good policy in one area can be undermined by bad policy in another. As a result, they tend to have teams, individuals or strategies in place who champion innovation across departmental silos.

Being open by default. City governments should recognise that the kind of knowledge and ideas needed to drive change are unlikely to reside entirely within city hall. As a result, they habitually find ways to work with outsiders in solving urban problems.

Employing styles of working that are more closely associated with start-ups than bureaucrats. Cities should be happy to try things out and not afraid to fail. High-performing cities are increasingly delivering agile projects, prototyping, deploying user-led design and developing digital services. As a result, they are able to move quickly as the world changes around them.