1. Cities of the future
global competition, local leadership*
*connectedthinking

3. Cities of the future - global competition, local leadership
Contents
Part 1 Cities of the future
Executive summary 1
Chapter 1 The vision for cities 7
Chapter 2 The way to the future in cities 13
Chapter 3 Managing capitals 27
Chapter 4 Capitals, the key issues 37
4.1 Intellectual and social capital 38
4.2 Democratic capital 45
4.3 Cultural and leisure capital 52
4.4 Environmental capital 57
4.5 Technical capital 62
4.6 Financial capital 69
Chapter 5 Summary and conclusions 77
Part 2 Cities in focus
List of participating cities 85
Interview summaries 86
Appendix 1 Lead authors 174
Appendix 2 Bibliography 175
Cities of the future

4. Cities of the future - global competition, local leadership

5. Cities of the future - global competition, local leadership
Part 1
Cities of the future
“We need new perspectives on cities, their dreams, knowledge,
creativity and motivation in order to find new ways to develop
strategic city management. Therefore PricewaterhouseCoopers
(PwC) will develop a new arena for dialogue with leaders in cities
as a tool for strategic development and knowledge sharing,
resulting in added value for people in cities, organisations or
companies.”
Cities of the future

7. Executive summary
Many of the challenges and opportunities In this report, the first from the network, we
that are coming to define the early part of set out to discover the principle challenges
the 21st century are at their most visible and trends that are influencing city leaders
in the cities in which a growing proportion in their strategies for delivering prosperous
of the world’s population now lives. and socially harmonious environments for
their citizens. In the course of our research,
In response to the importance of cities in we interviewed over 40 senior figures from
the global economy, cities all over the world. What emerges from
PricewaterhouseCoopers (PwC) established these interviews is a number of common
a City and Local Government Network in themes that all city leaders, despite their
2004. The Network aims to bring together specific circumstances, believe to be
city leaders so that they can share the setting the agenda for their cities.
experience, knowledge and insights that
they have gained and to develop their ideas This report takes those themes and
and strategies for the future. explores some of the strategic responses
required for effective leadership. We have
The City and Local Government analysed the constituent elements of the
city into a number of different asset groups,
Network’s vision is: or capitals, that form the basis for
“We need new perspectives of cities, their developing a strategic agenda that will take
dreams, knowledge, creativity, and a city forward. These capitals cover the
motivation in order to find new ways to people, knowledge, natural resources,
develop strategic city management. technical infrastructure, finances,
Therefore PwC will develop a new arena democratic and political aspects and
for dialogue with leaders in cities as a tool cultural values that a city embodies. Using
for strategic development and knowledge these capitals as a starting point, the report
sharing, resulting in added value for examines how different cities around the
people in cities, organisations or world are developing their understanding of
companies.” each form of capital and assessing how
they can ensure that they develop the city
intelligence to make the best use of the
capitals they have and develop those which
may be in shorter supply.
Intellectual and social capital
Environmental
capital
Financial
capital
Technical
Culture and capital
leisure capital
Democratic capital
Figure 1: Integrating capitals
Executive summary 1

8. Cities of the future - global competition, local leadership
There are six different types of capital and dialogue, all need to be taken into
discussed in this report: account when establishing a strategic
plan for the future. In addition to these
• Intellectual and social capital – people
trends, city leaders also identified a
and knowledge;
number of significant challenges that have
• Democratic capital – participation and to be taken into account when creating a
consultation; strategic plan for the future.
• Cultural capital – values, behaviours
Challenges for:
and public expressions;
Intellectual and social capital
• Environmental capital – natural
Competing in the international knowledge
resources;
economy means ensuring that the
• Technical capital – man-made capital appropriate people, skills and capabilities
and infrastructure; and are developed, with city leaders
demonstrating that they understand how
• Financial capital – money and assets.
these qualities can be captured and
allowed to prosper.
Navigating into the future
Managing these identified capitals Democratic capital
effectively means taking a holistic City administrations need to improve their
approach, since each of the capitals accountability and the transparency of
depends on the others. their dialogue with citizens in order to
achieve the commitment of the whole city
The necessity of taking a holistic on its journey into the future.
approach is one of the themes to emerge
particularly strongly from the interviews Cultural and leisure capital
with city leaders. These city leaders are The competition among cities is intense,
keen to stand back from meeting the day and a strong city brand is a potent
to day demands and look to the future to weapon to maximise the visibility of a
see how their policies and strategies can city’s qualities and allow it to differentiate
adapt to the dynamic social, economic itself from its competitors.
and political environments unfolding in
their cities. This process is like navigation Environmental capital
– but navigation into the future. To make Environmental issues are near the top of
sure that cities reach their intended all cities’ agendas. As quality of life
destination they need to be aware of their becomes an important source of
starting position. This requires them to competitive advantage, cities have to
ask some important strategic questions, provide a clean, green and safe
identify their strengths and work towards environment for their citizens.
eliminating areas of weakness.
Technical capital
Once cities have identified where they are,
The demands on a city’s infrastructure
they need to decide where they want to
change and expand constantly. Cities
be in the future. And to do this, they need
have to ensure that their physical and
to understand the significant trends that
technological assets can support the
will influence the direction in which the
changing needs of their citizens.
future unfolds.
Financial capital
These mega-trends cut across the
experience of all cities. The trends Growing demands on cities’ budgets,
towards individualism, for example, or the combined with diminishing revenue bases
effect that information and mean that cities need to be creative and
communications technology has had on flexible in their financial strategies and
speeding up the demand for information increasingly partner with the private sector.
2 Executive summary

9. Managing all of these capitals together Intellectual and social capital
requires strong leadership. City leaders Intellectual capital is identified by the city
need to develop a style of leadership that leaders as one of, if not the most,
is both highly consultative and directional. important assets that their cities possess.
They need to inspire and fulfil the dreams In the knowledge economy, it is the
and visions of the future that they share people in a city – their skills, capabilities
with the people and organisations that and knowledge – that can make a critical
their city comprises. Values are a critical difference to a city’s ability to compete
element of good leadership. A value- successfully for investment.
based approach is one that city leaders
How do cities measure and map their
are increasingly adopting. Value-based
intellectual capital? Measuring intangible
leadership operates on the basis of a
assets is very difficult and the evidence
number of specific, shared values that are
suggests that, to date, very few cities
communicated clearly throughout an
have specific initiatives in place to do so.
organisation and used by the leaders to
However, from our interviews with city
guide their daily thoughts and actions.
leaders it is clear that many of them are
Managing capitals trying to develop policies that will make
their cities attractive to the skilled and
City governments are highly complex
entrepreneurial people that will help their
organisations. They need to respond to
cities to succeed in the economy of the
the demands of many different groups
21st century. One of the key drivers of a
and manage the allocation of resources
city’s attractiveness is the extent to which
between different, and often competing,
people feel connected to one another, in
claims.
other words, the degree of social capital
Developing the capabilities to ensure that that exists.
cities manage their capitals effectively
Social capital is, again, hard to define but
means looking at the people, processes
expresses itself in the quality of informal
and property that they need to manage in
and formal relationships that characterise a
order to achieve their goals.
city. The degree of social capital in a city is
Cities need to make sure that they can linked closely to low levels of crime, to
measure the performance of each of educational achievement and to physical
these three categories. Without effective and mental health. Building a sense of
performance management, cities will not cohesion though is not easy. Many of the
be able to create a culture of continuous city leaders we spoke to cited the challenge
improvement. of ensuring that divisions and segregation
The pace and extent of change that cities were not allowed to develop between rich
have to cope with requires them to become and poor, and between different cultures.
particularly adept at programme and project Engaging all citizens is therefore a major
management. To do this, they need to challenge for cities.
create the right skills that can guide and
support change within the organisation. As Democratic capital
with any programme of substantial change, All of the city leaders that we interviewed in
effective risk management is an essential compiling this report stressed the central
tool. City governments have to identify and themes of collaboration and participation.
understand the risks that they face, gauge City governments – like other political
their own appetite for risks and link their entities – are faced with the challenge of
risk management policies to governance declining participation in the democratic
and compliance frameworks in an process. To renew the interest and activity
integrated way. of their citizens, cities have to develop ways
With the right frameworks and to make themselves more accountable,
competencies in place, cities can start to increase the transparency of their decision
manage the different assets they possess making and engage citizens directly in the
and begin to address the specific challenges creation of policies and decisions.
that each type of capital presents.
Executive summary 3

10. Cities of the future - global competition, local leadership
Cities need to develop new partnerships A city wishing to compete for attention in
with the different stakeholders they serve. the global market place needs to
New forms of partnership that go beyond undertake a wide-ranging audit of all the
simply listening to the views of others but qualities that differentiate it from others.
take action together are a vital part of this. Once these qualities are understood, they
Citizens become more than a voter or need to be developed and promoted to
customer – they are engaged as co- the type of people that the city wishes to
producers in the policies that will shape attract. The ‘experience economy’ is an
the city’s future. increasingly important concept in
Channels for interaction are also understanding what makes one city
expanding and, most significantly, the different to another. It goes beyond simply
Internet is providing a new forum for real the institutions (cultural or otherwise) a
interaction. More than simply providing city offers. The experience economy
information, the Internet provides a consists of the whole range of
platform for genuine dialogue between associations and emotions that people
cities and citizens in a way that traditional experience when they spend time – or
channels cannot easily accommodate. consider spending time – in a particular
place. Creativity – the bedrock of the
Developing accountability is a key aspect of
experience economy – cannot be ‘bought
the strategies that cities are adopting to
in’. Instead, city planners have to tease
engage their citizens. They are doing this by
out their city’s unique qualities, and invest
disclosing their own targets and recording
in nurturing and developing them.
their performance against them; by creating
collaborative forums with specific interest There is no single plan for creating a
groups (e.g. business) and by arranging their successful city brand. However, there are
services around the needs of their citizens. several strategies available that can help
cities to draw attention to their qualities. For
Cultural and leisure capital cities wishing to embark on this journey,
A city comprises a complex array of there are some critical questions to ask.
attributes that provide it with its unique They need to consider what will attract the
identity. Cities that have succeeded in attention of the world to their city and, more
attracting visitors, residents and importantly, what will keep it there?
businesses do so by creating a city brand
Environmental capital
that encapsulates the qualities that the
city offers and generates powerful and The quality of life that a city offers is a
memorable positive associations. fundamental aspect of its ability to
prosper. Offering citizens a clean, green,
In building a brand, a city has to be aware
safe and attractive environment is high on
of how it is seen by the outside world. What
the list of priorities for city leaders.
are the cultural qualities it is seen to have?
What is the lifestyle associated with the Balancing economic development with
city? Strategies designed to develop cultural environmental impact is a significant
capital need to understand how they are challenge. Pollution, in all its forms, is a
seen now and, from that understanding, major problem for many cities and so city
develop the steps they need to take to governments have to develop policies that
move their city forward to the experience incorporate economic and environmental
that they wish to offer. Various different considerations.
strategic directions are available. Global Developing policies for sustainable
attractions can put a city on the map (such development necessitates a joined-up
as the Guggenheim Gallery in Bilbao) and a approach to decision making. This means
sporting or cultural event can act as a that environmental considerations are an
magnet (e.g. the Barcelona Olympics that integral part of policy development across
propelled the city on to the world stage) to the spectrum of city government. Planning,
draw the world’s attention. But a city cannot transport, finance and economic policies all
rely only on single attractions or events; it need to reflect the environmental goals that
has to use these as a starting point for the a city sets for itself.
beginning of a much longer journey.
4 Executive summary

11. Citizens, too, need to be engaged in the pressure from a host of competing
development and implementation of demands. At the same time, citizens
environmental policies and be encouraged demand better services but are reluctant
to take responsibility for the quality of the to pay more for them. The familiar
environment in which they live. Engaging dilemma of having to do more with less is
citizens is more than important; it is a one that all cities are facing.
prerequisite for success in developing In order to respond to this challenge, cities
sustainable environmental improvements. have to do a number of things. They have to
establish accounting policies and analyses
Technical capital
that allow them to understand their financial
The enormous complexity of cities today position, and introduce financial disciplines
means that the demands on their and performance management
infrastructure are relentlessly challenging. methodologies based on these findings.
Not only are the ‘basic’ needs of transport,
Cities need to adopt an entrepreneurial
housing, water and energy under strain, but
approach to the way that they finance and
new demands for effective communication
provide services. They need to understand
make the supply of, for example,
the true costs of the services and products
broadband and electronic networks an
that they supply in order to evaluate
increasingly important element of
whether alternative provision (such as
infrastructure provision.
shared services) may be more efficient.
To cope with these challenges, many cities Some cities may be more effective in
are adopting an integrated approach to certain areas than others. They should seek
their urban planning. Rather than planning opportunities to ‘trade’ with other cities –
for the separate provision of transport and selling those services that they perform
housing, for example, a more holistic view most efficiently and buying in those where it
is being adopted that seeks to measure the makes financial sense to do so.
combined impacts of different types of
New forms of partnership are also critical.
development. This integrated approach also
Many city authorities are discovering the
means that cities are looking to establish
advantages of working with the private
partnerships and new forms of
sector to fund the provision of services
collaboration that allow them to deliver
and infrastructure in innovative ways.
infrastructure requirements in new ways.
Public-private partnerships to deliver Taken together, the demands on a city’s
infrastructure are now a common feature of finances call for planning that sets out the
many cities, and allow city governments to goals and tasks that the city wishes to
share the risks of provision with partners achieve, and establishes how the funding
from the private sector. and investment they require can be most
effectively put in place. By consulting and
The pressure on cities to operate more
examining the experience of others, they
efficiently and at the same time improve
will be able to begin developing the
their services to citizens is increasingly
financial structures that will allow them to
responded to by the adoption of techno-
meet their present and future needs.
logical solutions. Improving processes and
workflows within the city administration Unique cities, common challenges
itself is a key focus for many cities. Using
Our conversations with city leaders from
new technology to improve
all over the world show that, while each
communications and the flow of data within
city has its own unique identity and
an organisation is made possible through
circumstances, they also face numerous
the application of e-Government solutions
common challenges and opportunities.
that are connecting departments and
cutting across the traditional boundaries to A wide range of skills and capabilities are
allow more effective collaboration, resulting needed to respond to those challenges,
in better service for citizens. and we hope that this report will help city
leaders and others to develop their own
Financial capital responses and assist them in their efforts to
Cities face a number of common financial ensure the prosperity of their own cities.
challenges. Budgets are under intense
Executive summary 5

12. 6

13. Cities of the future
Chapter 1
The vision for cities
In this chapter we outline our approach to developing
new perspectives on governance and management
practices in global cities - the concept of ‘managing
capitals.’
The vision for cities 7

14. Cities of the future - global competition, local leadership
New perspectives on the city bring together this wealth of knowledge and
experience. This Cities of the future – global
As the 21st century unfolds, and we move
competition, local leadership document is
ever faster towards global economic
the network’s first publication. The aim of
integration, the role of major cities, in
the project is to identify the most important
driving forward growth, prosperity and
trends and challenges affecting major cities
social wellbeing is changing significantly.
across the globe.
Cities today are dense networks of
interchanging investments, information, Since the autumn of 2004 we have
goods and people as well as centres of interviewed over 40 senior political (mayors)
innovation and knowledge management. and managerial leaders (city managers)
from a range of cities. This document aims
There are approximately 400 cities in the
to bring together the common issues and
world each of which has more than 1
challenges facing these cities and share
million citizens. The largest metropolitan
how political leaders and managers
area, Tokyo, has 28 million citizens and
interpret and respond to these issues, both
New York City has over 20 million.
today and in their planning for the future.
According to the 2004 United Nations
We have tried to link the insights we have
HABITAT report, 60% of the world’s
gained to the visions and strategies
population will live in a city by 2030.
required to help cities compete on both the
Determining what is a big and what is a global and local stage.
small city depends on where you are in
We recognise that political leaders and
the world. A city with 300,000 citizens is,
city managers require a new approach to
for some, a ‘big’ city, while for others it’s
networks and arenas for dialogue with
small. The question of scale is relative and
citizens, companies and organisations so
so, in our terminology, a city is simply one
that strategic growth and development
that has a significant impact on the
can be achieved on a sustainable basis.
economy and development of a nation.
In order to find relevant ideas for city leaders,
Fundamentally, we also need to ask what a
we have explored the key issues facing
city is. It’s a place to live, which means
leaders of the future. We have developed the
somewhere to grow, to develop and to
concept of ‘managing capitals’, to examine
enjoy. But it’s also a place to work, to
and explain the wide range of economic,
educate, to socialise and to relax. Our focus
social, practical and managerial issues facing
is, of course, on these aspects, but history
global cities. The term “capital” refers to the
teaches us that the construction of many
range of strategic assets and resources
old cities was motivated by fear and the
within a city. These are:
search for protection. All these trends
influence the development of a modern city.
Capital Focus
Cities aim to provide a warm atmosphere,
welcoming people to stay, enjoy themselves Intellectual People and knowledge
and in doing so spend their money. At the and social capital resource
same time social disunity, crime and poverty
Democratic Transparency,
cannot be ignored. These factors motivate capital participation and
the ongoing struggle for the city that patnerships
improves people’s lives and meets their
Cultural and Values, behaviours
needs in all areas of life.
leisure and public
capital expressions
The cities of the future project
Environmental Natural resources
PwC has strong connections with cities and capital
local governments around the world – from
Technical capital Man-made capital,
Sweden to Australia, and from Japan to infrastructure
Brazil. In 2004 the ‘Cities and Local
Government Network’ was established to Financial capital Money and assets
8 The vision for cities

15. Of course, as figure 2 below illustrates, each
of these capitals is inter-related, and must
be managed in a holistic and integrated way
to successfully grow and develop cities in a
sustainable manner.
Intellectual and social capital
Environmental
capital
Financial
capital
Technical
Culture and capital
leisure capital
Democratic capital
Figure 2: Integrating capitals
This document begins with a chapter on money or profit and the business or
strategic development and leadership, services they provide are the means by
setting out the key challenges and which to generate profit. In a public sector
opportunities for the future. We then organisation, e.g. a city authority, the goal
examine each of the capitals in more depth, is to provide services and the means are
presenting examples of good practice from provided by citizen’s taxes. It is therefore
the cities we have interviewed. important to take a multi-dimensional
approach to understanding what value
The basis for our approach is the and benefits customers and citizens
difference between private and public derive from their ‘investment’ in public
sector organisations. As figure 3 below services.
shows, the goals in private companies are
Public sector Private sector
Business Money
Goal
Profit in service Profit in £, $ or €
and benefits
Means Money Business
Taxes, fees Service and benefits
Figure 3: Goals for public and private sector companies
The vision for cities 9

16. Cities of the future - global competition, local leadership
In order to clarify some of the major issues • To be a facilitator, and provider of new
Strategic question: that cities face we have, throughout the arenas for a creative professional-
document, posed a number of strategic public dialogue between city
How does your city develop a new
questions – see opposite for an example. government, business professionals
integrated strategic approach across
Their aim is to direct a city’s attention to and wider civic society;
all its capital bases (resources) that
key issues and to instigate a debate and
will create a better, more sustainable • Create new content and new meaning
exchange of information about the many
and competitive city in the future? for terms like innovation, intelligence,
possible responses to the common
challenges to which such questions give transparency, trust, corporate
rise. In our analysis and commentary, we governance and government;
have drawn on our extensive experience as
• Use the PwC City and Local
advisers to many different cities all over the
Government Network as a prototype
world. We have also made sure that the
designed to increase strategic social
perceptions and insights of those in the ‘hot
capital for city development and
seat’ – the mayors and city managers that
leadership, and to facilitate mutual
are tasked with implementing strategies –
learning between city leaders; and
are central to this publication.
• Highlight the importance of local and
City and Local Government global connections between city
leaders in the world.
Network – the long term vision
This publication is the first milestone in We hope that leaders in cities around the
our work to take forward and develop the world will find this report interesting and
global PwC Cities and Local Government valuable for their tasks and commitments
Network. Our vision for the future is: in fulfilling the vision of developing their
city as an even greater one in the future.
“We need new perspectives on cities and
their citizens, their dreams, knowledge,
creativity, and motivation in order to find
Acknowledgements
new ways to develop strategic city We especially want to thank the following
management. Therefore PwC will develop people for giving us energy and
a new arena for dialogue with leaders in inspiration to try “to see around the
cities as a tool for strategic development corner” in the area of strategic
and knowledge sharing, resulting in added development and leadership relating to
value for people in cities, organisations or challenges that cities face in the future:
companies”.
• Each of the interviewees who so
Our goal is to: generously gave time and ideas to this
project;
• Create an informal and fellowship-
based network among city leaders with • Leif Edvinsson, the world’s first Professor
the motivation to develop new thoughts of Intellectual Capital, University of Lund.
for cities; In 1998, Professor Edvinsson received
the “The Global Brain of the Year” award
• Build the next level of public trust into
from Brain Trust in Great Britain for his
cities of the future, together with
research and development; and
political leadership and professional
management; • Robert and Janet Denhardt, Professors
at Arizona State University, Department
• Help to create excellence in the cities,
of Public Affairs in Phoenix, Arizona,
and their services and businesses;
USA.
10 The vision for cities

17. 11

18. 12

19. Cities of the future
Chapter 2
The way to the future in cities
In this chapter we set out the importance of having a
holistic view on how to approach the future. We think
leadership is the key to managing all the capitals
mentioned in Chapter 1. Effective leadership, and the
use of social intelligence provide the solid base for the
necessary vision and ideas to take cities forward.
The way to future
Cities of thethe future in cities 13

20. Cities of the future - global competition, local leadership
Navigating into the future the city? Finally there is route and speed:
how quickly and by which path will we
requires an open mind and reach our destination? To create a vision
leadership and a dream takes time, but there is no
A cynical attitude among some time to wait. The journey to the future has
experienced leaders is that the future is already started.
simply a recycling of old ideas and
concepts under different and new names. The navigation process depends on how
This philosophy and approach says that we consider our position today and what
the future is behind us. There is nothing kind of approach we will use to reach our
new to come, and no expectation of real future vision. Below are four different
change in the future. approaches to navigating in relation to the
surrounding world:
Change is real and the demands of the
future are pressing on us all. We need Inactive No interpretation of trends
leaders with the vision and the dreams
that will empower and inspire people. Reactive Responding to the
Rapidly changing modern societies are agenda of others
creating a need for strategic development
Proactive Make detailed plans for
that offers constant innovation and a
renewal of processes and peoples’ the future and set trends
attitudes. It is important that a city’s Interactive Shape and respond to
leaders are able to see things in a new changing trends over time
way. Strategic social analysis and
intelligence involves learning from the
past but, most importantly, understanding The leaders of tomorrow need the right
the likely direction of the future. Social approach to the journey as they try to
intelligence is an area of vital importance understand and adapt their course
related to what we call city intelligence. according to trends forecast for the future.
When conditions change, leaders must
An intelligent community has to be able to respond immediately. Is it time to sail
see what happens through time, that is against the wind for a while, but then
analyse, reach conclusions and define its change again? During this process the
present reality. They need to develop their leader needs to develop a “mental GPS”
strengths and eliminate their weaknesses. based on intelligence gathered from a
That is how we create visions, ideas, and wide variety of sources. Knowledge
a strategy; and consequently how we navigation is one relevant term in this
create and prepare for the future. It is context.
essential that a municipality has the
power to implement all this. Some city This way of working is possible only if
governments stay in the analytical phase there is a clear-cut appreciation of the
and never move on to formulating and direction to take – which, in turn, requires
implementing their visions and dreams. a strong vision linked to committed
leadership and a well-managed
Governments leading a city towards an organisation. To achieve this, leaders have
uncertain future are like the navigators of a to analyse both from the outside in (global
ship. The crew and passengers comprise trends and tendencies) and from the
their citizens, employees and customers. In inside out (visions for the city and its
this way, navigation is very similar to the organisation).
leadership of a large organisation or a city.
The first concern is strategic position,
where are we right now? The next
consideration is destination, where are we
going? What are our visions or dreams for
14 The way to the future in cities

21. Communication is vital to achieving a demanding citizens. Cities need to think
common understanding of why social of their citizens as ‘consumers’, and Strategic questions:
intelligence and analysis are so important. ensure that public services match the
Some of the reasons for their importance standards of the very best in the private • In what areas is your city in a lead
include: sector. position? (closer to the future) than
your “competing” cities?;
• Creating intellectual and practical Merging
readiness for the future; • Do you and your leadership group
Many areas of life are merging together in
• Creating strategic advantage; new ways. This is happening within cities have an interactive approach to
and nations (e.g. European Union); with strategic navigation, which means
• Facilitating a creative discussion of the technologies like Hi-Tec, Bio-Tec and understanding what’s going on in
interpretation of trends (opportunities medicine; between cultures and values;
your environment, and trying to
and threats); and between work and leisure; and between
interpret what it will mean for the
the public and private sectors in public
• Helping leadership to explain the need private partnerships (PPP). Regionalisation organisation in the future?;
for ongoing change in the organisation. is another practical implication of this
process. • Has your city developed a strategic
Mega trends affecting the tool for “city intelligence”?; and
strategic agenda in cities Acceleration
Speed is increasing in all areas of life. This
• How much of your working time do
A mega trend is one that affects the you spend thinking about the future?
majority of areas of civil, business and is often driven by information and
public life. It creates consequences communication technology (ICT) and the
everywhere and for everyone, not least for search for growth. Citizens and customers
cities. Some examples include: want on-line access to all public and
private services, and the ‘democratic
Globalisation / Glocalisation dialogue’ increasingly demands rapid
exchange of information between
The global economy is becoming truly
government and citizens.
integrated. Today’s simultaneous global
and local focus creates a new framework
Hi – Tech
of ideas and opportunities. Global
companies and economies work in local Technology is creating many new
competition, within global structures. This possibilities in the public sector. Access to
is sometimes called “Glocalisation”. When high-speed information has revolutionised
a big company either arrives or leaves a global culture. Technology has
city, it affects many areas of life for the implications for the delivery of all existing
city and its citizens. New international services including administration,
networks and cooperation between cities education, healthcare, communication,
can create significant strategic transportation and many more. In the
advantages. At the same time we need to future we will also see more and more of
consider the new anti-globalisation the science of robotics in the public
movement. sector. Intelligent houses used in the care
of the elderly are just one example.
Individualism
Hi – Touch
Individualism has become an increasingly
important social trend. We see it in In the modern society the “hardware” of
marketing, with developments like “one- technology must go together with the
to-one” and relationship marketing “software” of emotions, nostalgia, values,
instead of strategies that focus on groups. architecture and design, visions and
Today we talk about the “I – generation”, dreams. The environmentally-friendly,
which means people who are: safe, secure and aesthetic city is
individualistic, informal, informed, imperative for modern civic pride.
interactive and international. This Achieving this balance creates significant
phenomenon has an important impact on challenges for city leaders in the future.
the dialogue between the city and its
The way to the future in cities 15

22. Cities of the future - global competition, local leadership
Changing demographics harnessed. Often migrants bring a wealth
The issue of an ageing population will have of skills to their new country but often
a major impact across the globe. The their qualifications and training are not
United Nations HABITAT report shows that recognised by their destination country.
the number of people aged 65 and older For example, they may not be eligible to
will rise from 15% to 27% of the total work in their profession or sector without
population in the developed world. In the re-training. As a consequence many high
developing world it will rise from 6% to skilled workers often end up in low paid
14%. The highest birth rates are found in jobs in their new country.
the developing world, arguably in those
Whilst migration has an impact on
countries least able to support their existing
employment issues, it also has an impact
population. By contrast, in many developed
on issues of social cohesion and
countries the birth rates have fallen
inclusiveness. The global mobility of
dramatically, and consequently there are
labour and capital has been on-going for
fewer economically active people. The
many centuries but it has intensified over
World Future Society reports that the
recent decades. Global migration has
workforce will shrink by 1% per year, over
both positive and negative impacts on a
the next ten years. From 2030 this is
wide range of issues including social
forecast to increase to 1.5% per annum.
capital, identity and knowledge.
Urbanisation These global mega trends create both
The United Nations HABITAT report 2004 opportunities and threats. This means that
predicted that by 2030 around 60% of the the strategic agenda of tomorrow is a
world’s population will live in a city. It is unique interpretation of these trends and
also relevant today to talk about a trend their impact on the city in practical terms.
called “metropolitanisation”. This term The issues are complex and changes
refers to the growing influence of large happen rapidly.
cities on the economic health and
prosperity of wider regions and in some The following challenges will have a
cases nations. As David Miller, Mayor of significant impact on cities:
Toronto, expresses it: “When Toronto was • Ageing population causing increased
sick the whole country caught a cold”. In financial burdens on health and welfare
that instance, the national economy of systems;
Canada shrunk by approximately 1%
because of the SARS outbreak in Toronto. • Economic restructuring, increased
unemployment and the end of ‘life-
Strategic questions: Migration long’ working;
Urbanisation is also linked to increased
• What indicators do we look for in our • Disasters including natural
global migration. Each and every one of
research and analysis?; catastrophes, terrorism and epidemics
the cities we spoke to cited increasing
(HIV/ AIDS, Avian Flu);
migration as a major issue. There is no
• What do we see around the corner?;
doubt that increased migration presents • Crime (not least economic), safety and
• What do the trends mean for the major challenges around social cohesion, security;
city/community as a whole?; and integration and employment. However, it
also presents great opportunities as cities • Migration and immigration (people and
• How do we develop a strategic city capitalise on “knowledge migration”. knowledge), segregation and poverty;
compass (intelligence system) that One aspect of knowledge migration is the • Social cohesion and equality;
helps us understand and act on expertise and experience that is lost when
changes in the world, before it is too companies relocate or outsource parts of • Sustainable development and
their business. Another factor to be economic growth from both the local
late?
considered is how knowledge and skills of and global perspective;
immigrant communities can be
16 The way to the future in cities

23. • Environmental management – pollution • Privatisation and outsourcing, including
in all its forms, waste and lack of water; partnerships (PPP);
• Energy consumption and energy prices; • Effective e-government and ‘24-hour’
citizen-focussed access;
• Provision of good quality affordable
housing; • Creating new arenas for dialogue
• Connectivity – effective public transport between the city and its stakeholders;
and electronic motorways; • New approaches in leadership and
• Competition between cities and management – territorial or community
regions, nationally and internationally – leadership. Leaders must provide a
“city branding” and marketing; and vision and strategy for the whole
community not just the administrative
• Need for better dialogue between organisation; and
citizens and city employees and the
city leadership. • ‘ Entrepreneurial prototyping’ or the
concept of piloting initiatives to test
Examples of internal or organisational their effectiveness before making
global trends with relevance to cities are: wholesale change.
• Financial pressures and the need for A good example of entrepreneurial
new revenue streams; prototyping is the Swedish city of Gavel.
In order to create growth and strategic
• The need for new accounting models
development in the city and in the region,
and greater transparency;
the city has developed a model that
• Creating confidence and building integrates the city and its public
public trust through citizen companies, private companies, the
engagement and dialogue; university, the non-profit sector and the
citizens who all make a special
• Improving performance and the
contribution to the city and the region.
delivery of efficient and effective
The relationships are underpinned by
services;
shared values and attitudes, which are
• Decentralisation with accountability; considered as important elements for
success, as illustrated in figure 4 below.
Private
University Supporting role
Renewal through sector
prototypes and attitude
City
government
Facilitate Open dialogue
Non-profit Enthusiasts
associations Citizens
Figure 4: Values and attitudes underpinning successful relationships
The way to the future in cities 17

24. Cities of the future - global competition, local leadership
Summary of key challenges Financial capital
Strategic questions: All cities face the pressure to do more
facing cities
with less, and to find new sources of
• How do you facilitate creativity and From our conversations with city leaders
revenue. Partnerships with the private
innovation in your organisation and and managers we have been able to
sector and outsourcing are becoming
city?; and identify a number of common challenges
more common, and cities need to find
that cities are facing and responding to.
ways to capture the risk-sharing and
• How does your city manage the These correspond to the management of
financial benefits that working with the
issues of contemporary society and the various types of capital analysed in
private sector can deliver. Cities are under
the economy and how is it preparing this report and can be understood in
pressure to be more transparent and to
terms of:
for the challenges to come? implement accounting models that
provide them with this ability.
Intellectual and social capital
Cities everywhere recognise the Vision – the ticket to the future
challenges in ensuring that they can
The problem with good ideas and strong
attract and foster the people, skills and
vision is that realising them involves a lot
capabilities they need to prosper in the
of hard work. Leaders have to turn their
knowledge economy. City administrations
vision into reality. Actions are critical.
need to become facilitators of change and
Vision without action is meaningless.
provide leadership.
The municipality needs to provide the
circumstances in which citizens and
Democratic capital
businesses can fulfil their potential.
To create public trust and enhance their
accountability, cities need to encourage Cities need both strong and interesting
dialogue between citizens and leaders, vision and dreams for the future. These
and to find new forums for collaboration need to be communicated to the citizens in
between city leaders, city employees and order to inspire people with what cities can
citizens. achieve, with them, in the future. So the
“multi-mutual” benefits for strong visions in
Cultural and leisure capital a city could be described as:
Cities are competing at a regional,
• Motivating people by giving hope and
national and international level with one
belief for the future;
another to attract visitors, new residents
and investment. They need to create and • Giving the organisation direction;
maintain a distinctive and powerful brand.
• Giving inspiration for new challenges;
Environmental capital
• Agreeing a common description of a
Cities need to provide a clean, green and
desirable future; and
safe environment and deal with pollution
in all its forms, manage waste and water • Providing a strategic position in
resources. marketing, communicating and
branding the city.
Technical capital
All cities face the problem of ensuring that We are entering a new paradigm of
their infrastructure can support the rapidly society that requires new ways of thinking
developing needs of their citizens and and acting. Futurist professor Rolf Jensen
businesses in the city. Transport and from Copenhagen in Denmark identified a
affordable housing are pressing issues in new type of emerging society that he calls
many cities. Building appropriate the “Dream Society”. This society
technological infrastructure, such as emphasises story telling, culture, values
broadband, is also vital in terms of serving and ethos. In this society of the future a
citizens more effectively and efficiently. city needs to emphasise its cultural
heritage in order to distinguish itself from
18 The way to the future in cities

25. other cities and to attract citizens. This How do leaders create the visions that will
requires professional skills in involve new actors and people from
communication and emotional different areas of society, with new
intelligence. An intelligent city takes these agendas in new areas and new ways of
factors into consideration by looking into working?
its past for stories that will ‘touch citizens’
hearts’ and by engaging the ‘storytellers’ Leaders must have the courage to try new
that will create culture and strengthen the ideas and to encourage robust dialogue
sense of community spirit in the city. between politicians, administrators,
Taking a diagrammatic approach to this companies, associations, and individuals.
shows the history of this society gradually They need to create meeting places or
developing as described below. arenas where those stakeholders can
exchange their ideas. In researching this
Type of Society Most important report, we have seen how many cities
asset have organised those different
stakeholders in order to create a vision for
Hunter Wild animals their cities. Numerous cities place a
strong emphasis on facilitating this
Agriculture Animals & land creative process, as the examples
Industrial Iron and steel overleaf illustrate.
Information Data
Knowledge Creativity &
innovation
Experience Vision & dreams
The same report describes the most
important and fastest growing markets.
These are very important for every city
with a goal to become one of the cities of
the future. The markets and driving forces
are:
Market Driving force
The markets of The experience
adventure society
The market of The tiredness of
fellowship individualism
The market for The ageing
care population
The who am I The identity crisis
market among youth
The market for The search for
peace of mind happiness and health
The market for The need to tell the
conviction right stories
The way to the future in cities 19

26. Cities of the future - global competition, local leadership
City of Oslo – The blue and reduced the number of school leavers
green city by improving the social standing of
teachers and increasing their
“City of Oslo towards 2020 is participation in school administration”
simultaneously the environmental city,
the cultural city and the knowledge Melbourne – Planning for the
city. The environmental city is about future
maintaining City of Oslo’s "blue-green”
distinctiveness arising from its “City Plan 2010 sets out Melbourne City
proximity to both the fjord and the Council's vision for the next 10 years.
forest. The knowledge city is about Leaders wish to see a thriving and
taking advantage of and developing sustainable city and the council is
the lead we already have on the working with all its stakeholders to realise
competition as one of the best- this vision and simultaneously pursue:
educated people in Europe. The • economic prosperity;
cultural city points forward. Our aim is
• social equity; and
to become Europe’s cultural capital in
2011, and a grand development is • environmental quality.
taking place in the form of cultural
Melbourne has already made many
institutions in the city ie the building of
positive changes to the natural and
a new Opera house."
physical environment, to the City's
culture, to the way it does business,
Barcelona – City of knowledge
and the way it values the community.
“The vision of Barcelona in 2015 is that The Council has adopted a set of
of a city characterised by the following: strategic directions to realise this
An economy based on the vision. These directions are organised
development of a value-added and around four themes:
innovative culture depending on the
growth of new industries: audiovisuals, • Connection and accessibility;
design, etc. New uses of transport • Innovation and business vitality;
based on the improvement of mobility.
• Inclusiveness and engagement; and
An education system that can
guarantee proper training for our • Environmental responsibility.”
human resources, having notably
From city intelligence to Florida, Professor of regional economic
development at Carnegie Mellon University
intelligent cities in Pittsburgh, recognises the rise of the
Today, many cities have formulated creative class of scientists, engineers,
strategies for transforming themselves architects, educators, writers, artists, and
into a ‘knowledge´ or ‘creative’ city. These entertainers. The creative class is
concepts are driven by rapid economic characterised by creativity, individuality,
and societal change. In these modern diversity, and merit. Creative people have
cities citizens’ knowledge, creativity and specific demands of a city. They want
innovation are identified as the driving action and experience, a dynamic place
force of wealth creation. Knowledge cities which offers them the opportunity to be
value the quality and density of creative, the possibility of expressing
educational and research excellence and themselves and the chance to develop as
of redeveloping old industrial areas into individuals (Florida, 2002). Either called
centres for knowledge workers. knowledge workers or the creative class,
these are the people that the modern city
Creative cities make an effort to provide the
tries to attract: those that will contribute
stimulation, diversity and richness of
most to the city’s development.
experiences for their citizens. Richard
20 The way to the future in cities

27. An intelligent city is a work in progress An intelligent city needs to have
that tries to connect the past, present-day sustainability factors like those that made Intelligent cities
and future. The concept embraces many Ragusa one of the first intelligent cities in
An example of an intelligent city is
aspects of sustainable cities from history, history.
the Republic of Ragusa identified by
the current knowledge and creative
Other qualities are also necessary. For the Professor Stefan Dedijer, an innovator
society, and an estimation of what lies
Dream Society, one of the most important of social intelligence, as one of the
ahead. Each city should learn from its
aspects for the future of city is meeting first intelligent cities in history.
past and historical heritage. But lessons
places. An intelligent municipality needs Though little known, the Republic of
are available from other cities as well.
to create the context where knowledge Ragusa, between the 14th and 19th
Research has shown that the following workers can exchange their ideas and centuries, enjoyed an impact far
factors have been decisive for the success engage their creativity. beyond its apparent size or power.
of intelligent cities (Radovanovic, 2004): Ragusa was a city-state on the east
An intelligent leadership also needs to coast of the Adriatic Sea that
• Political stamina and government understand the extent of the stock of the sustained independence through five
engagement; city’s most important resource; intellectual centuries despite being throughout its
• Organised Intelligence and Security; capital. Mapping intellectual capital history an easy target for the great
• The Spirit of Ragusa and cohesiveness enables a city leadership to allocate its expansionist powers including
(see opposite); resources more effectively and manage Venice, and the Ottoman and
them appropriately. A rating of intellectual Hapsburg empires. The city is
• Diversity; capital is also likely to be used by interesting because it exemplified
• Rich cultural life; international companies as an important sustainable development, skilfully
tool for selecting an international leveraged from the city’s intellectual
• Scientific environment and knowledge
destination for investment. capital and organised municipal
tradition; and
intelligence. Ragusa had one of the
• Favourable geographical position and Figure 5 shows some of the main first examples of organised municipal
infrastructure for transport and characteristics of an intelligent city: intelligence in the world. All citizens
communication. abroad served as the “eyes and ears”
of the municipal government to
collect strategic information that
The Dream could be traded or used in contacts
Knowledge economy
and Informational Society Society with the great powers.
Factors: Factors: Factors:
Knowledge Creativity Storytellers
Human intellect Creative class Story/legend
Innovation Creative milieu IC mapping
Meeting place Real city Social intellect
Virtual city Virtual/real
Knowledge Creative Intelligent
City City City
RAGUSA
• Municipal intelligence
• Intelligent Leadership engaged
with specific roles
Organised intelligence • Mapping of IC
Government engagement • Good story to create spirit and
The spirit/homogeneity
homogeneity
• Networking arena and activities
• Virtual/real city
Source: Radovanovic, D. (2004)
Figure 5: Characteristics of an intelligent city
The way to the future in cities 21