Will the city of the future be a hyperlocal manufacturing cluster?

June 1, 2012 17 Comments

20120605-005134.jpg

(Image by Rob Boudon)

I’ve become really excited recently about the ability of three trends to transform city economies: improving bandwidth and connectivity; the increasingly intimate way that information technology can be connected to the physical environment; and the relationship between industry convergence, localism and the creation of economic value.

Together, they lead me to the question in the title of this post: will the city of the future be a hyperlocal manufacturing cluster?

(They also lead me to a serious challenge. But I’ll return to that at the end).

Let’s take each theme in turn:

How increasing bandwidth improves the quality of user experience to the point of industry disruption

As the bandwith available for communications has increased over time, the quality of user experience we are able to provide online in advertising, shopping, music, telephony and video has in turn lead to disruptions that disintermediate traditional industry structures – epitomised by Craig’s List, Amazon, iTunes, Skype and YouTube. Business and technology innnovators are constantly looking for new opportunities to cause disruptions and take controlling stakes in the new markets they create.

How the digitisation of materials and physical processes will transform manufacturing

Digitisation and mass customisation are now sweeping through manufacturing. Intelligent materials and components capable of storing information will communicate instructions to the production machines processing them to indicate what product they should be fashioned into. New “apps” will be downloaded to those machines to change their function. Small versions of such “Smart machines” – the evolution of today’s 3D printers – will be distributed throughout cities, and even in our homes, along with a stock of raw smart materials. This wave of change is already known as “Industry 4.0” and is emerging as a strong theme of Germany’s economic strategy, as described by Professor Wolfgang Wahlster of the German Research Centre for Artificial Intelligence.

As these incredible advances in the ability of information technology to control physical materials take place, for some products it is becoming more important to be able to manufacture customised items locally in immediate response to individual demand – i.e. to perform in-market innovation – than it is to globally source the lowest cost manufacturer for large numbers of identical items.

How convergence between industries creates economic value

All of the examples above represent convergence between related industries such as technology, communications, publishing and consumer electronics. The theory of economic clusters states that such convergence is necessary to maintain profit margins, because over time those margins otherwise diminish through competition and innovation in supply. To maintain profit margins, products and services need to be adapted by adding additional features, often produced by capabilities associated with related industry sectors.

Convergence is usually caused by the exploitation of newly availabe – or newly cost-effective – technology in response to, or in order to create, market demand. Amazon’s appropriation of consumer device technology in the form of the Kindle is an example. This convergence at the level of individual capabilities takes place constantly, in addition to the industry disruptions in my original examples. From time to time, a combination of the two effects creates entirely new markets such as search, which was captured very effectively by Google following the initial successes of AltaVista and Yahoo.

Why the Smarter City of the future will be a low carbon hyperlocal manufacturing cluster

The near-future ideas of Industry 4.0 represent a convergence between the technology, communications and manufacturing industries. To an extent they’ve been here for some time in the form of highly configurable car factories such as the Nissan plant in Sunderland, where up to 6 models have been produced from just two production lines over the past 2 years. It is the most productive car plant in Europe.

The spread of Industry 4.0 to localised application in city environments and even homes will be transformative. The carbon footprint created by transportation in the supply chain will be reduced; and new careers (such as some of those suggested by Google’s Futurist Thomas Frey) will be created to exploit the capabilities of these new manufacturing platforms.

The use of social media to turn product design into a collaborative process (as Zuda did for Comics and Threadless did for T-shirts) could be applied in the home to more physically complicated goods such as confectionary (for example using 3D printers for chocolate).

I was lucky enough this week to speak at the 3rd European Summit on the Future Internet at the University of Aalto in Espoo, Finland. Speakers such as Wolfgang Wahlster, Jean-Luc Beylat (President of Alcatel-Lucent Bell Labs in France), and Ilkka Lakaniemi (Director of Business Environment Strategy for Nokia) all spoke on themes related to the ideas in this post.

The challenge for society in the Industry 4.0 era

To temper the excitement associated with these profound changes, considerable concern was also expressed at the summit for the effects on mass employment. Whilst the “re-shoring” of manufacturing is already bringing some manufacturing employment back to developed economies as global wage differentials reduce, there’s no doubt that less people, and with considerably different skills, will be employed in the process of making things as Industry 4.0 gathers pace.

Our challenge as a society and individuals is to continue to create new exchanges of value between each other, in new forms. My observation in the UK is that hand-made products and locally sourced food are in increasing demand, for instance. And there’s no doubt that the quality of our lives would in many cases be improved if more effort were expended maintaining and improving the physical environment around us.

Indeed, there’s some evidence to suggest that growth in the so-called “DIY economy” of freelance employment across trade and professions is accelerating following the recession, supported in some cases by technology platforms for “micro-entrepreneurialism” (such as Etsy‘s online market for handmade goods). These can also be seen as examples of convergence and disintermediation.

I hope we turn out to be as innovative and determined in addressing this social challenge as we are in exploiting the advances of technology for economic reasons.

Filed under Economics Tagged with , , , , ,

Extreme urbanism: live here at your peril

May 17, 2012 15 Comments

20120605-011210.jpg

(Photo by O Palsson)

In “The Triumph of the City“‘ Edward Glaeser argues that efficient cities should be built up around elevators, rather than built out around cars. As a resident of Birmingham, the city where Matthew Boulton and James Watt came together to commercialise the steam engine that powered the first of those elevators (see here and here), I’m predisposed to agree.

Glaeser, along with Richard Florida, Tim Stonor and others argue that cities are vital to our society and economy as they are the places where people congregate to generate and share ideas, and enact Matt Ridley’s memorable idea that value is created when “ideas have sex“. Glaeser even argues that cities emphasise our basic humanity because the defining characteristic of that humanity is our ability and desire to learn from each other.

It’s also clear that our cities need to improve in efficiency. As more and more people live on the planet and as more and more of us live in cities, political, charitable and scientific organisations have pointed out that each of us simply must consume less resources. For examples refer to the United Nations “7 Billion Actions” programme; the lobbying organisation Population Matters; and the recent report published by the UK’s Royal Academy, “People and the Planet“.

But how far do we want to go in using the modern technologies that have succeeded lifts and cars to enable us to live in ever greater numbers at ever greater density?

Some imaginative but frankly scary forms of extreme urbanism are emerging as technologists invent concepts for ever larger and more densely populated cities, and for systems to supply the resources that enable the people who live in them to live and work. I’m saying that as a technologist myself; and as someone who’s passionate about the possibilities technology offers to improve wealth and wellbeing in urban environments – I gave some examples in a previous blog post.

But I don’t personally find it attractive, for example, to consider that the only way we can feed city populations is by growing artificial meat in laboratories, as Dutch and Canadian scientists have suggested. Or that we should farm vertically in skyscrapers, at the same time as building homes and offices for people underground in “earthscrapers“.

To me those ideas are extreme urbanism; and they don’t represent the sort of city I’d like to live in. (I do live in a city, by the way; and whilst I live in a relatively spacious suburb, I nevertheless find it easy to use efficient public transport to get around far more than I use my own car).

There are alternatives to extreme urbanism. One of them is adopting a sensible approach to population growth, as promoted by Population Matters amongst others. Our challenges would be less severe if there were less of us; and many of the most disadvantaged communities and individuals across the world would be better off if they were more able to choose the size of their families and provide equal opportunities to all of their children of either sex.

And there are healthier ideas for applying technology to make cities more efficient. Rather than growing meat in laboratories, why not provide the know-how to encourage people to grow vegetables and keep small animals in city gardens, as Landshare and Growing Birmingham do? And why not use social media intelligently to connect food consumers with local food producers as Big Barn do, making it as easy to buy sustainable, locally produced food as it is to buy globally sourced food from supermarkets?

There are tremendous efficiencies that can be realised in city systems by such “hyperlocal” thinking; and the same ideas could make city life more attractive and nuanced, rather than clinical and engineered.

For a couple of years now I’ve been producing my own air-dried and smoked meats such as salami, bresaola, and chorizo at home in Birmingham. Of course they do not taste the same as the Mediterranean originals; but they taste vastly superior to anything I’ve bought in a supermarket. Rather than think of them as poor alternatives to Spanish and Italian produce, why not consider them regional variations to be explored and valued?

The aforementioned Royal Academy report asserts that as a species inhabiting a planet we find ourselves at a crucial juncture for determining what the size of our population should be, and how we should collaborate to use resources to sustain ourselves. I would argue that our response should be a balanced assessment of the opportunity for technology to enable efficient city ecosystems, in combination with moderation of population growth.

If we get that right, we can all enjoy a more interesting, healthy and efficient life. I would much prefer that outcome to the possibility of descending by default into the extreme dystopias described in novels such as “We” by Yevgeny Zamyatin or films such as Logan’s Run. They describe worlds that are fascinating to experience as works of art; but I’d hate to live in them.

Filed under Urbanism Tagged with , , ,

Virtualisation is bringing us back together

April 26, 2012 9 Comments

20120605-012840.jpg

(Image by Chris Drumm)

Back in 1953, Isaac Asimov’s “The Caves of Steel” was published, depicting a world of avatars, virtual collaboration and video-conferencing. It took the real world half a century to catch up with him. Asimov was a smart guy.

But he got one thing wrong. Asimov predicted that reliance on these forms of communication would make us terrified of meeting each other in person. Instead, research has shown that social media is often used to identify new and interesting people to meet in real life (see this article from the American Public Broadcasting Service, for example). In fact, this is exactly how I met my wife. More recently, I’ve enjoyed meeting @Sanfire_IA and @NewOptimists, amongst others, firstly on Twitter (go look them up), and then in real life. (In coffee shops, to be precise).

Tim Stonor and Dan Holowack have both written very interesting blog posts recently about the important role cities play in bringing people together, face-to-face, to create and share ideas. It’s the very lifeblood of the economy. (Edward Glaeser’s “Triumph of the City” discusses this topic in great and fascinating length).

The technologies that connect us virtually have a very important role to play in that aspects of our cities. I’ve met recently with people in cities including Birmingham, London and Sunderland who are involved in stimulating innovation and entrepreneurial activity in city economies. They are all passionate about the value that is created when creative people with disparate skills are brought together.

But they were also unanimous in voicing a concern that it’s tremendously difficult to persuade such people to take time away from the businesses they’re spending 60, 80 or 100 hours a week starting and running to meet people they don’t know; on the off-chance that a valuable new business idea will somehow spring into existence.

All of us face that challenge to some degree today. With the explosive growth in the flow of information we’ve experienced over the last 20 years or so, competition for our time and attention is intense. Social media is a significant part of that explosion of course; but it’s also a significant part of the answer.

Within a few minutes, on Freecycle I can find people near me who need what I no longer want; on LandShare I can find people whose untended land can be used to grow food, and on StumbleUpon I can find moments of genius in every domain from places I’d never in a million years have thought to look, but which StumbleUpon’s fuzzy search engine has ensured are nevertheless relevant to me. And then I can get in touch, arrange to meet, and find out more.

(I have deliberately chosen some of these examples, by the way, for their relevance to the efficiency with which natural resources are used to support economic activity. The recent “People and the Planet” report written by an incredible array of international experts on behalf of the Royal Society should leave us in no doubt at all of the importance of that topic).

This morning, I’ll be attending Birmingham’s Social Media cafe following a discussion about innovation in Birmingham in a Linked-In group, to discuss ideas for social business with people who I haven’t met before, but who I will probably soon be following on Twitter. That’s a great example of the interplay between virtual and physical interactions that’s speeding up the process of collaborative innovation and value-creation in cities today.

But it doesn’t stop there. Digitisation and mass customisation are long-standing trends in manufacturing, but technologies such as 3D printing are going to transform custom-manufacturing in the same way that global-sourcing and production line automation relatively recently transformed commodity manufacturing. And as this brilliant article in The Economist argues, the result will probably be to bring manufacturing activity back to be more local to the consumers of the goods being manufactured.

I turned 40 recently; traditionally a landmark that brings a certain degree of questioning of one’s direction in life. I have no such questions. The family that I now have after meeting my wife through social media is the most important part of that; and the privilege of living through these incredibly exciting and transformational times is the icing on the cake. I can’t wait to see where we’ll go next.

Filed under Science & Technology Tagged with , , , , , , , ,

The world is at our childrens’ fingertips; and they will change it

April 19, 2012 7 Comments

(Image by TurkleTom)

Several of my recent posts to this blog have been concerned with two sides of the same coin: the importance of science and technology skills to our societies and economies; and the importance of making technology and information consumable and accessible.

But this is the first time I’m putting those concerns to the test in the very act of writing my blog – which I’m doing using the iPad that arrived 3 days ago.

My last purchase from Apple – a company whose controlling approach to technology and media ecosystems I don’t admire – was a 3rd generation iPod; it’s now so unusually old that I’m often asked if it’s some strange *new* gadget. I was very unimpressed by the speed with which that iPod’s battery deteriorated, and by the impossibility of replacing it. So I needed some considerable persuasion to shell out several hundred pounds on an iPad.

That persuasion came from my 3 year old son. On the (very rare, if you’re my boss reading this) occasions that I work from home, I sometimes share my laptop screen with him. My side has my e-mail on it; his side has Thomas the Tank Engine on YouTube (he gets the better deal). Often when I launch a new window, it pops up on his side of the screen, obscuring whatever’s going on on Sodor. His immediate and instinctive reaction is to touch the screen and try to drag the obstruction out of the way.

(I heard an amazing corollary to this from a contact at Birmingham City Council yesterday – she’s seen her toddler drag her fingers apart on the surface of a paper magazine in an attempt to “zoom” the pictures in it!)

I’ve just written an article that repeats an often quoted though hard to source statistic that 90% of the information that exists in the world today was created (or more accurately recorded) in the last 5 years.

That made me think that: every fact in the world is literally at the fingertips of our children.

You can argue whether that’s literally true; and whether it’s equally true for all the children in the world (it’s clearly not); but there’s a deep and fundamental truth to the insight that suggests: however much we think the technologies we use today have already changed the world, it’s absolutely nothing compared to the utter transformation that will be created by the real “information natives” that our very young children will become.

That’s why I shelled out for an iPad this week. Love Apple or loathe them, they are creating technologies that offer us – if we explore and engage with them – a window into an important part of the future. And if we want to help our children, our schools, our businesses and our cities prepare for that future, then we had better do our best to get to grips with them ourselves.

Filed under Science & Technology Tagged with , , , , , ,

How will the UK create the skills that the economy of 2020 will need?

April 12, 2012 4 Comments

(Photo by Orange Tuesday)

I’ve been reading Edward Glaeser’s book “The Triumph of the City” recently. One of his arguments is that the basis of sustainable city economies is the presence of clusters of small, entrepreneurial businesses that constantly co-create new commercial value from technological innovations.

Alan Penn, the Dean of the Bartlett Institute for the Built Environment, made similar comments to me recently. Interestingly, both Alan and Edward Glaesar identified Birmingham, my hometown, as an example of a city with such an innovative, marketplace economy, along with London. They also both identified Manchester as a counter-example of a city overly dependent on commoditised industries and external investment.

Cities are fundamentally important to the UK economy; more than 90% of the UK population lives in urban areas. But many – or perhaps most – UK cities are not well placed to support innovative, marketplace-based, high-technology economies (see my recent post on this topic). For example, e-Skills UK report that less than 20% of people hired into information technology positions in the UK acquired their skills in the education system; and I agree strongly with Seth Godin’s views as expressed by the “Stop Stealing Dreams” manifesto that we need to question and change the fundamental objectives around which our education system is designed.

To create and / or sustain economies capable of organic innovation and growth, cities need a particular mixture of skills: entrepreneurial skills; commercial skills; operational skills; technology skills; and creative skills. The blunt truth is that our education system isn’t structured to deliver those skills to city economies with this objective.

Whilst the opinions I’ve expressed here are personal, I’ll shortly be launching a project at work for my employer IBM to look at the challenges in this space. IBM’s business interest is our need to continue hiring smart, skilled people in the UK; the interest of IBM’s technical community as individuals to commit their time to the project additionally involves personal passion for technology and education.

I’m enormously aware that I’m not the first person to whom these thoughts have occurred; and I know that I and my colleagues in IBM don’t have all the answers.

So if this topic interests you and you’d like to share your insight with the project I’m going to run this year, please let me know. I’d very much appreciate hearing from you.

Filed under Science & Technology Tagged with , , , , , ,

Open Data isn’t free data

March 9, 2012 8 Comments

An early mashup using open data from Chicago’s police force

I support the principle of Open Data; and I’ve been creating commercial value from it since at least 2007, when as part of IBM’s Emerging Technologies team I developed scenarios to show how our customers could exploit it using early implementations of “Mashup” technology.

Here’s an example of what we were up to in those days, using alpha code for IBM Mashup Centre to integrate open data from Chicago’s public services with business data from insurance applications running in CICS. CICS is a transaction engine that’s now 43 years old and is used by 90% of Fortune 500 companies. When you take money out of a cashpoint, book an airline seat or renew your home insurance, there’s a decent chance CICS is involved somewhere. So there was (and is) vast economic potential in what we were doing.

But it’s not always straightforward to realise that value. It’s no accident we based our demonstration scenario in Chicago, which has long been at the leading edge of cities promoting Open Data. (It’s well worth catching up with how Chicago’s new CTO John Tolva is driving this agenda forwards, by the way). At the time, many other cities published similar data; but it wasn’t usable in the same way that Chicago’s was. It had been published in the form that was possible, cheaply, rather than in a form that was useful.

My point is: Open Data won’t deliver the value we all want it to unless we answer some hard questions. Such as:

Who will use Open Data, and why?

There are too many Open Data sites that don’t attract users and activity; so the investment in operating them doesn’t result in the creation of new value. That’s a shame; and we should try to understand why it happens. Often, I think it’s because they focus on making as much data as possible available in whatever form it’s in.

The Knight Commission report “The Information Needs of Communities” emphasised instead the need to consult with communities to find out what they need, rather than to publish data in anticipation of innovation. They are now publishing further guidance on implementing their ideas to promote open government.

Obviously, the problem with the extreme of this position is that if we restrict our Open Data efforts to providing only that data which is proven to be required through extensive consultation, we will limit the opportunity for spontaneous innovation. So a balance needs to be found.

How much does open data cost?

My experience building Open Data scenarios for our early Mashup technology taught me that high quality open data in a useable form was very rare. That’s because it’s expensive.

If producing highly usable information from the applications that manage the world’s information was easy or cheap, a good part of the IT industry would disappear overnight (whether you think that would be good or bad: it hasn’t happened). If we want usable data, we’re going to have to find ways and reasons to pay for it.

The cost to public sector organisations of processing Freedom of Information requests will sometimes provide the business case for spending money to open up data, but not always. Recent Government initiatives to make Open Data a criteria of future procurements will bake the cost of it into vendor proposals; but that won’t address the cost of opening up data from existing systems.

Finally, there will be many cases where clear value can be derived from open data; but not by the organisation that bears to cost of creating or distributing it. In order to balance the need for open innovation with the need to flow cost and revenue between organisations in a reasonable way, commercial models such as “freemium” will need to be explored. The “Dublinked” Open Data portal is doing that, for example.

How do we access and use Open Data?

As William Perrin argued recently, we need to think about how Open Data will be used beyond the community of technologists. I’ve blogged before about the need for technology and information to be accessible; and the need for our education system to provide us with the skills to use technology to manipulate and understand information. Those are both big challenges that we won’t overcome any time soon.

Where do we go next?

The potential value of Open Data is too great for us to afford to be negative, cynical or apathetic. Software automation and information technology are changing the way that value is created in the economy (see work on this from Imperial College and McKinsey), and the concept of Open Data is crucial to providing access to that potential across all sectors of society. But we will only realise that value if we find ways to addressing the cost of providing usable information; and to invest in making it accessible.

Acknowledgement: I’d like to thank Simon Whitehouse for discussions leading to this post, and for the link to William Perrin’s article.

Filed under Science & Technology Tagged with , , , , , ,

Accessibility or Bust

February 28, 2012 7 Comments

(Photo: “Cable Confusion” by e-magic)

It’s been obvious since the 1990s that the communication and collaboration technologies that have evolved from the internet and mobile telephony are changing our planet – its culture, its environment and its economy. What’s differentiated those who’ve succeeded in applying those technologies from those who’ve failed is their ability to integrate them with society.

By society I mean people and the economy. People in the sense of the consumability and accessibility of technology; and the economy in the sense of adding value to the interactions between people. If technology isn’t consumable and accessible by people, and if it doesn’t add value to their interactions, it won’t be used.

James Watt and Matthew Boulton got this absolutely right in their industrial and commercial exploitation of the steam engine, which Jenny Uglow argued in her brilliant book “The Lunar Men” was the catalyst for the Industrial Revolution. Reuters got it right when they started a business using one of the original low-latency messaging technologies to distribute news around the world faster than anyone else – carrier pigeons.

We’re living through an era of acute financial, demographic and environmental pressures that we expect technology to rescue us from. The Internet of Things and Open Data will make information available to anyone, anytime to take better decisions, and use resources more efficiently. Internet entrepreneurs will continue to create innovative new business models. Cities everywhere will build digital industries to drive economic growth. The cost of transactions in public service and commerce will fall as delivery becomes “digital by default”.

Or will they?

People can only use information to take better decisions if they understand that information.

Take the transformation to open, digital, public services and personal budgets, for example, in UK public services. If individuals are to choose effectively which care services to purchase with their care budgets, then they need to be presented with comprehensible information that describes the range of services available to them. They need information describing what the services do; the quality of service outcomes and delivery; and who the provider of the service is. They need information describing who measures service quality, and how. They need information that describes whether they are eligible for the service, how much it costs, how to access it, and how to complain if something goes wrong. And that’s just for starters.

This is starting to sound like an awful lot of complicated information. Because we’re talking about social care, it needs to be presented to vulnerable people, who may have difficulty understanding it, and may not be able or willing to use digital technology.

Solving our problems using technology is not about Open Data, Open Source, or Agile Development or supporting the nation’s technology SMEs. All of those things are important, but they’re not enough. We need an acceleration of the rollout of broadband connectivity; we need to look at whether channels such as digital television and mobile can be used effectively; we need a really effective network of “living labs” to explore how people can interact effectively with these technologies; and we need to examine indirect user interactions with digital services, where a carer, a friend or a family member uses technology on behalf of someone else.

I’m exploring some of these issues in Sunderland, where the city has invested in broadband connectivity, Cloud computing, and a network of 39 “e-Village Halls” (see short articles on the Council’s website here  and here) which provide access to online information and transactions from community and neighbourhood centres in a trusted environment where help and advice are available. A few years ago, the Council ran a scheme called the “Let’s Go” Card where more than 2500 disadvantaged young people were given a smartcard with £33 a month to spend on leisure and educational activities that could be booked through an online portal. Many of the people in the scheme didn’t have direct access to the internet themselves; but they could get it through friends. The scheme was a huge success, with 94% of the eligible young people taking part.

The TSB’s Creative Industries KTN has looked recently at applying their expertise to the consumability of information provided by Smart Meters and other “Internet of Things” technologies; and I know of some other high-profile organisations who are developing similar plans. They’re starting to draw many private sector companies and Universities into their activities, and I think the results will be fascinating.

IBM’s own Andy Stanford-Clark has been interested in this subject for a while, and has explored the concept of ambient information interfaces which communicate information about domestic energy use in a non-technical way. And the NHS in the West Midlands is exploring effective ways to communicate healthcare information within a community of patients and employees through the NHS Local site. They have engaged a television production company, Maverick Television, to design the site using their expertise in communicating through technology. I hope that all of these initiatives will contribute to our ability to design smarter, digital city systems that we can all engage effectively in.

For me, this is the real shape of things to come. There’s been a lot of focus recently on improving the teaching of technology skills in the UK economy. But as I commented recently on this blog, to develop technology with real societal impact, we need to focus on a broader combination of technology, information, scientific, creative and entrepreneurial skills.

To put my money where my mouth is, I’m hoping to start a study project soon to explore that idea in more detail and create some recommendations for doing things differently. I’d be delighted to hear from anyone who’s interested in taking part.

Filed under Science & Technology Tagged with , , , , ,

Who will be the next generation of technology millionaires?

February 16, 2012 8 Comments

(Image: “IT is innovation” by Frank Allan Hansen)

A few years ago I attended a dinner debate hosted by the British Computer Society about the future of technology careers in the UK. At the time, I’d recently written a report for IBM UK on the subject. The common motivation was to explore the effect of globalisation on the UK’s IT industry.

Despite the continuing emergence of high quality technology industries around the world, the local demand for technology skills in the UK was then, and is now, increasing. The secret to understanding the seeming contradiction is twofold.

Firstly, consider which specific skills are required, and why. To cut a long story short, the ones that are needed on-shore in countries with high wages such as the UK are the ones most closely tied to agile innovation in local economic and cultural markets, or to the operation of critical infrastructures (such as water, roads and energy) or operations (such as banking and law enforcement).

Secondly, the more fundamental point is that we’re living through an Information Revolution that is increasing in pace and impact. That means the demand for science, technology, mathematics and information skills is going through the roof across the board. As  evidence, consider this article from McKinsey on the hidden “Information Economy”; or the claim that 90% of the information in the world was created in the last two years (widely referenced, e.g. by this article in Forbes); or that IBM now employs more mathematics PhD holders than any other organisation in the world.

At the BCS debate, a consultant from Capgemini introduced the evening by describing his meeting that morning with a group of London-based internet entrepreneurs. These people were young (20-25), successful (owning and running businesses worth £millions), and fiercely technology literate.

Today, I wonder if the same meeting would be held with internet entrepreneurs? In ten years time, I certainly don’t think it will be – they’ll be genetic engineers, nano-technologists, or experts in some field we can’t imagine yet. Of course, there are already many early entrepreneurs exploring those fields, as was shown in Adam Rutherford’s recent BBC Horizon documentary “Playing God”  (see this video or this review).

I’ve blogged recently about the importance of skills, education and localism to the future of our cities’ and country’s economies. This leads me to believe that more important than addressing the UK’s shortfall in IT skills (as reported by e-Skills last year) is understanding how to systematically integrate the teaching of technology, science, creative and business skills across schools, universities and vocational education. Further, that needs to be done in a way that’s responsive to the changes that will come to the sciences and technologies that have the most power to compliment the unique economy, geography and culture of the British isles.

This is already a problem for the UK economy. The e-Skills report found that UK businesses are nearly 10% less productive than US ones; and that 80% of that gap is down to less effective use of technology. Their research predicts that closing the technology gap could contribute £50bn to the UK economy over 5-7 years. But their finding that the British Education system provides less than 20% of the technology skills we need today means that closing the gap will be hard.

As the information revolution proceeds, the problem will get worse. And unless we do something about it in an enlightened way that recognises that the science and technology skills we’ll need in 10 years time are not the IT skills that are familiar to us today, we’ll fail to address it.

I was born in 1970; for me, the Tandy TRS80 computer my family bought in 1980 was a technological marvel, with its 16k RAM and graphic resolution of 128×48 pixels (all of them green). Today, my 3 year old son is growing up with a high resolution smartphone touchscreen as an unremarkable part of his world. By the time he’s of working age, the world will be unrecognisable – as will the skills he’ll require to be successful in it.

From the earliest years, we need to be exciting children in the mixture of creativity; abstract thinking and modelling; mathematics, technology, art and entrepreneurialism that are apparent now in such forums as TED. (www.ted.com). Whatever their interest and acumen, we need to give them the opportunity to find their own niche in that range of cross-disciplinary skills that will be economically valuable in the future. If we don’t, they won’t be ready to find jobs in the industries of the future when the computer programming industry, and others as we know them today, disappear.

Filed under Science & Technology Tagged with , , , , , ,

How to pay for a Smarter City

February 2, 2012 3 Comments

(Photo of a halfpenny minted by Matthew Boulton in Birmingham; from Smabs Sputzer)

There are many definitions of what a Smarter City is; but a lot of them boil down to something that seems like common sense: spend some money doing things that have positive outcomes, rather than spending (much) more money trying (and often failing) to fix things that have gone wrong.

One reason that’s hard to do is that providing the accurate and holistic information needed to identify which preventative measures need to be taken where and when requires an investment in improving the systems that provide information to decision makers. That information might come from sensors on physical infrastructure; from people; from information systems; or from all of those sources.

Advances in technology are lowering the cost of collecting, integrating and exploiting that information; but the more fundamental problem is how to justify any investment at all in preventative action by one organisation when the benefits are realised by other organisations, some time later.

For example, (as is very well known) it has proven persistently uneconomic for network providers to deploy broadband coverage in areas with low economic activity. Despite the potential benefits to business and residents that technologies such as telecare and remote working could provide, there are simply not enough potential subscribers from whom network providers could collect revenues to recover the deployment cost. In most cases where this issue has been addressed, it is through Government or European grants – and those sources won’t provide a generally scalable financial model for Smarter Cities.

I haven’t figured out how to fix this; but I think I’ve realised what a couple of pieces of the puzzle are.

The global financial situation is forcing public sector organisations everywhere to make significant savings – around 10%-20% of their budgets. They can only do that by sharing capabilities such as IT services and back office processes. Of course, this results in job losses that cause real hardship, and I count friends, neighbours and colleagues among those who have lost their employment in this way.

But the resulting shared IT platforms do enable an opportunity to simplify the business case for investing in Smarter Cities. Those platforms can deliver IT capabilities to organisations in City regions at incremental cost. These days we call that Cloud Computing.

The multi-tenancy, automation of provisioning, and virtualisation of Cloud Computing enables capabilities paid for by a business case in one domain – such as predictive analytics and information portals – to be subsequently exploited at incremental cost in other domains. This way, business cases that to date have not been economically viable may now become so.

The majority of cities around the world need such capabilities to be available to Smarter City initiatives at incremental cost because they are not in the same financial positions as some of the most commonly referenced Smarter Cities. They do not have forthcoming global sporting events driving inward investment such as the Olympic Games or football World Cup, as London and Rio do. And they are not new-build cities in emerging economies such as China, paid for by strong growth in working populations and the economy.

For these cities, a Cloud platform can help them achieve Smarter City transformations through a carefully sequenced and co-ordinated series of investments, each of which is individually justified in one domain, but which adds capabilities that can then be cost effectively exploited elsewhere.

For example, case studies have shown how investments in information integration and analytic technologies can save money in delivering social care and reducing benefits fraud (see the examples from the London Borough of Brent in the UK and from Alameda County in the US (see this case study   and this video). In other cities where similar business cases are viable, information integration and analytics technologies could be deployed. If those technologies are made available to other City stakeholders through a regional Cloud platform on a commercial basis that reflects the ongoing operational cost of providing capacity, rather than the deployment cost of the platform, then the investment required to enable Smarter City solutions in other domains will be lower. It might make  traffic prediction solutions for commuters a viable investment to make, for example, in order to reduce the congestion that lowers economic productivity and job creation in cities.

This is likely to happen on regional city clouds rather than on nationally or internationally distributed public cloud infrastructures. The volume and velocity of the data required to generate timely insights based on holistic information means that the co-location of  data and analytics on a regional Cloud will be a vital for achieving the required performance and scalability.

I don’t claim that this approach will be straightforward or simple. The nature of Smarter City solutions in spreading across organisations, industry sectors and budgets will make the financial models and technology infrastructures – particularly in the areas of security, service management and resilience – a huge challenge.

But for the vast majority of cities, this approach is – in my opinion – the only way to make the investments that are required. I think 2012 will be a very significant year in the development of Smarter Cities. By the end of it, at the very least I’ll know whether I’m right or wrong.

Filed under Smarter Cities Tagged with , ,

Which cities will get Smarter fastest?

January 30, 2012 5 Comments

Birmingham is a diverse city currently undergoing the latest of many periods of regeneration

Last week the Centre for Cities published a report that IBM sponsored giving its 2012 Outlook for Cities in the UK. The report assesses economic and demographic statistics with the intention of identifying the cities most likely to succeed in improving their economic activity and prosperity. You can download a copy here.

The report is an interesting read, and offers challenging findings for cities such as Birmingham, where I live – whilst it is the second largest city in the UK, Birmingham has significant challenges and appears near the bottom of rankings for employment and the level of skills in the workforce.

However, in focussing on statistical information, the report takes insufficient account of two crucial factors. Because the report is seeking to influence the investment of government funds in the cities it identifies as best placed to succeed, I think these important omissions should be recognised.

Firstly, it does not take into account the specific initiatives currently taking place in many cities. You only have to look at the effect on Birmingham’s retail economy of the Council-led regeneration of the Bullring shopping centre to understand how fundamentally cities can be changed. The Bullring is now one of the most visited destinations in Europe and has transformed a city centre that used to attract relatively few visitors from outside.

Steps are also being taken to address the skills of the city’s workforce. The University of Birmingham recently announced that it will open a secondary school teaching a curriculum designed to develop successful University students. And last year, Birmingham City University and Maverick Television were two of the sponsors for Birmingham Ormiston Academy, an institution that will provide vocational education in creative media and performing arts. You could see both of these as vertical integrations in the supply chain of skills for the city’s economy. Centre for Cities’ report does not take account of the effect that these initiatives will have.

Looking to the future, the Royal Academy of Engineering recently published a paper assessing the potential and challenges for Smarter City Infrastructures to transform our cities. Several case studies have shown the benefit of applying sophisticated instrumentation and analytics to physical and information systems in areas such as transportation, water and social care. We can expect cities to continue to exploit such advances to transform themselves in new and unexpected ways.

The Centre for Cities report also fails to consider the willingness and ability of the ecosystem of political, economic and social organisations and their leaders to take effective action. Sunderland, for example, a city where I frequently work (see many previous posts in this blog, starting here) also scores poorly in many of the statistics in the report. However, a well developed “Economic Masterplan” has been agreed across organisations in the City, and the City Council has already made investments in citywide Broadband and Cloud Computing intended to move it forward. The strength and cohesion of leadership and vision across the city will be a tremendous asset in its transformation; by contrast, cities with more fragmented leadership or less crisp visions may make progress more slowly.

The 2012 Outlook for Cities does contain a wealth of important information that can help our cities understand their challenges and opportunities; and Center for Cities’ previous detailed research on the structure of city economies is also worth reading; particularly in light of one of their conclusions that I do agree strongly with – “cities with less dynamic private sectors … will find it more challenging to offset the combination of a weak national economy and the ongoing shrinkage of the public sector”.

But anyone who looked at the statistics of the technology industry prior to Steve Jobs return to Apple Computers in 1997 would have probably predicted nothing more than a continued decline for that company into a niche market for the graphic design community. So I hope the UK Government keeps an open mind and makes holistic assessments of Cities’ plans for transformation and their ability to execute them when deciding where to make investments, rather than relying on indicators of past performance.

One thing is for sure, though: we should all expect to see some surprises. History’s most reliable lesson is that it’s an imperfect guide to the future.

Filed under Economics Tagged with , , , , ,

← Older posts

Newer posts →