ALLEN LEW ADDRESSED THE ASIAN PACIFIC CITIES SUMMIT - THE FUTURE OF SMART CITIES

Good morning, and thanks JP for that kind introduction.

I don’t know if you remember, but in 1943, Thomas Watson, president of IBM said “I think there is a world market for maybe five computers”. In 1946, a movie executive Darryl Zanuck, said “Television won’t be able to hold on to any market it captures after the first six months. People will soon get tired of staring at a plywood box every night”. And in 1969, Margaret Thatcher said “No woman in my time will be prime minister”. The problem is that it is very difficult to imagine big changes before they become a reality.

Now, imagine a city that has driverless cars, streetlights that automatically adjust to ambient conditions, video crime monitoring, an on-demand public transport system synchronised to your personal needs… This could well be the eventual scenario.

More than 100 cities worldwide are working on developing smart city services of this kind. Each is distinct from the other, which implies that these ecosystems are driven by various stakeholders with different ambitions. But what is common is that city officials currently grapple with the question of how to achieve greater efficiency and higher satisfaction levels for their communities amidst an environment of limited financial resources, limited natural resources, a growing population, an ageing population and a highly informed constituency.

The solution involves individuals, governments and business alike, working in concert via the citywide (perhaps even nationwide) integrated use of data analytics, sensor networks, connectivity and smartphone apps.

City administrators and politicians have been driven towards such initiatives because of three global trends:

1. The Age of Urbanisation

All around the world, the focus on economic activity is shifting to cities. According to McKinsey and Company, the global urban population has been rising by an average of 65m people annually during the past 3 decades, the equivalent of adding three Australias a year, every year.

Nearly half of global GDP growth between 2010 and 2025 will come from the top 440 cities globally, many of them medium sized cities. Yes, Mumbai, Dubai and Shanghai are familiar, but in that list will be cities like Hsinchu in Northern Taiwan, Brazil’s Santa Catarina State, Tianjin, a city two hour drive south-east of Beijing.

Cities are now the world’s engines of economic growth, accounting for 70% of global GPD. Since current transportation, energy, water and emergency response systems are designed for a much smaller population and a more stable environment, this means all these cities will need to try new things to keep their citizens happy, otherwise they risk falling behind other global cities and watching, as innovations happen elsewhere.

2. Accelerating technology change

The record global force is the acceleration in the scope, scale and economic impact of technology. Today technology is ubiquitous in our lives and the speed of change is superfast. If we think about the adoption of new technologies, in order to reach 50 million users, it took 38 years for the radio technology, 13 years for the television and less than a year for Facebook and Twitter.

Looking forward, we can already see some of the newest technologies being deployed and taking off, such as autonomous vehicles, 3D printing, internet of things or energy storage. The furious pace of technological adoption (what we call consumer hyperadoption) and innovation is shortening the lifecycle of companies and forcing leaders to make decisions and commit resources much more quickly.

3. Responding to the challenges of an ageing world

The human population is getting older. Fertility is falling and the world’s population is greying dramatically. By 2040, it is estimated that about one in four people in advanced economies and China will be 65 years old or older.

According to the WHO, in 2013, 60% of the world’s population lived in countries with fertility rates below the replacement rate. This is a real change. The European Commission experts say that by 2060 Germany’s population will shrink by one-fifth and the Germany’s working age population will fall from 54m in 2010 to 36m in 2060, a level that is forecasted to be less than France.

A smaller workforce will place a greater focus on productivity in order to drive growth. And caring for large numbers of elderly people will put severe pressure on government finances. Therefore cities today are considering the opportunity of using technology to come up with solutions that will contribute to solving these problems.

However we also need to be mindful that investing billions (which cities will have to raise) in smart technology isn’t the answer to building more sustainable urban areas. Similarly, using sensors to collect big data will not achieve, in itself, ground breaking results in building smart cities.

Today there are already tools ranging from those that perform basic monitoring to advanced systems that enable predictive analytics based applications that can all have a significant impact on citizen’s well-being and the efficiencies of their daily lives.

What is required, really, are the big levers that I would call the “A-B-C”. These 3 levers will truly advance the smart cities initiative from its infancy (and small pilots) to a full scale implementation, that can create significant value for the city, its citizens and its businesses.

1. Analytics of big data in real time

Massive volumes of data created by every digital process and social media exchange can yield ground-breaking insights and solutions. Whilst current big data analytics software is great for historical data, it has to move more quickly towards being able to process massive volumes of data in real time.

And more importantly, no matter how smart your algorithms for integrating big data, it still requires humans to go beyond identifying correlations to prove causation. The bigger the data, the more each data point must compete for attention. And city administrators have to be aware that they may not have enough people with the right skills. Consulting Firm McKinsey estimates the US alone faces a shortage of 140,000 to 160,000 people with analytical expertise. So learning institutions have to ramp up appropriate graduates, even to the extent, in some countries, where learning the basics of program/ application coding is mandatory.

In fact, a fully integrated Smart City strategy with critical enablers such as the right quantity of talent in place, like Nanjing in China or Valencia in Spain, have achieved a high degree of usability and enabled significant GDP improvement (up to 15% GDP contribution).

2. Beacons that really make a difference

Unlike wind turbines or jet engines, cities are not spinning machines. It makes sense to install sensors on turbines and engines and things that tend to degrade without warning. When a new city is built from the ground up, like for example Songdo in Korea, sensoring everything up makes sense, but most cities already exist and must be more selective about what to implement.

Therefore building a new city should not be just about adopting all new technologies but about focusing on meeting the unique needs of their communities and preserving their individual personalities, based on their climate, history, geography and local culture.

Like a good highway, the value of connectivity to a smart city is not about the speed that can be achieved, but the destination it serves and the services along its path that benefit its users. Therefore, what is required to advance smart cities, is a comprehensive vision for building the infrastructure and for constructively using the massive data it generates every day.

It also requires the ability to plan, prioritise, coordinate and monitor the development of a smart city. In the case of Singapore, in order to ensure the right initiatives and benefits for its citizen, the government has established a Smart City Program Office, directly under the Prime Minister’s Office with a cabinet Minister in charge, and the weight of the government behind it.

And finally…

1. Collaboration

It is essential, in any smart city initiative, to have a cohesive and collaborative effort. Today city governments (like Transportation and Health) and businesses (like mobile companies and electricity companies) have lots of data about the geographic movements and behaviours of the city citizens. But all are protecting their own data for reasons of sensitivity – doing their own thing in their individual siloes.

We need to establish a common framework and platform that aggregates and shares data online, in a way that is open, but maintains privacy and protects from cyber-attacks. The more we are able to aggregate the data, the more we are able to see what’s going on across the different activities in the city. By collating this data, and creating the right environment where digital ecosystems can flourish, we can allow government departments, service providers, creative entrepreneurs and even the city’s own citizens to get on board too. They can contribute with their own information or with creative ways of analysing this “Open Data”, by, for example, creating apps that enhance the lives of their citizens.

Take “the Pulse of the City” app which is used with great success in the Spanish city of Santander to encourage locals to supply information. The app has turned citizens into “resident sensors” by allowing them to shape traffic conditions or report faults in city services (e.g., “potholes”). Since it was introduced, 75% of traffic incidents are now derived from the app.

In conclusion, the global forces of urbanisation, technology and ageing population will make it inevitable that smart cities will grow naturally over time via new apps, personal devices and data from citizens. The runway is certainly there and smart cities are within our reach. What remains is a successful take-off, and for that to happen, we need: a clear eyed perspective of the end goal; the right collaboration between industry, government and city residents; and a mindset of constant learning and experimentation. “The sky is the limit” as they say…