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How to strategize smart cities: Revealing the SMART model
JBR-08281; No of Pages 6 Journal of Business Research xxx (2015) xxx–xxx
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Journal of Business Research
How to strategize smart cities: Revealing the SMART model☆ Soumaya Ben Letaifa ⁎ Université du Québec à Montréal, Canada
a r t i c l e
i n f o
Article history: Received February 2014 Received in revised form October 2014 Accepted January 2015 Available online xxxx Keywords: Smart city Implementation Strategy Methodology Framework
a b s t r a c t The purpose of this study is to clarify how to design and implement strategies for building smart cities. Despite extensive research on cities' successful transformation into smart cities, a gap exists on how these cities' services shift toward smart services and on the methodology that the cities follow in transforming these services. This qualitative study builds on an integrative literature review and case studies to propose a methodological framework for the implementation of smart cities. © 2015 Elsevier Inc. All rights reserved.
1. Introduction The world's urban population will double from 2010 (2.6 billion) to 2050 (5.2 billion) (United Nations, 2011). Cities will face challenges concerning growth, performance, competitiveness, and residents' livelihoods (McKinsey & Company, 2013). Therefore, leaders must design new strategies to enhance city performance and sustainability. Many leaders choose to transform cities into “smart cities,” “intelligent cities,” or even “creative cities” (Table 1). These labels refer to new socioeconomic environments in which citizens, enterprises, and governments can more efficiently access services and resources. Many studies rank cities according to social, economic, and environmental criteria and describe well-performing cities. However, few authors tackle how to transform these cities and leaders' strategies for such change (McKinsey & Company, 2013). Because cities have diverse contexts, sizes, and resources, a need exists for a holistic and comprehensive framework that conceptualizes different components of a smart city and explains the strategic steps to follow. The framework should integrate several building blocks in one “IT-based innovation urban ecosystem” (Zygiaris, 2012, p.218). Although these components include technology, people, and institutions (Colldahl, Frey, & Kelemen, 2013), the literature usually focuses on technology's dominant role. Indeed, smart technologies transform cities' public and private services by integrating real-time communications,
☆ The author is grateful to contributions from the assistant Leslie Mbimbi, University of Quebec at Montreal, and Professor Alicia Mas-Tur, University of Valencia, for their careful reading and suggestions. Please send correspondence to Soumaya Ben Letaifa, CP 8888 succursale centreville Montréal, H3C3P8, QC Canada. ⁎ Corresponding author. E-mail address: [email protected].
citizens' needs, and information and by enhancing livability. In a period of sluggish growth, key technology adoption offers extraordinary opportunities for cities and can spark a new wave of wealth creation (Oxford Economics, 2011). The need to balance social development and economic growth in a context of high urbanization is the main driver of the worldwide interest in smart cities. Improving energy use, healthcare, transportation, education, and services entails the design of a strategy that integrates all of these sectors in a global and well-articulated systemic vision. Many scholars, however, view the city as a collective entity, reflecting a single homogeneous body with one voice (Vanolo, 2013). Despite growing interest, the management and marketing literature practically ignores the process of strategizing smart cities. This study analyzes cases of smart cities to address two important questions that management and marketing scholars and practitioners fail to answer: How do cities become smart cities? How do leaders strategize such projects?
2. Intelligent, creative, and smart cities Smart city is a relatively new concept that is highly context dependent (country, government, natural resources, IT knowledge, and capacities) (Weisi & Ping, 2014). The literature acknowledges the lack of consensus on how to define or classify smart cities (Ponting, 2013). The line between smart cities and similar concepts such as creative and intelligent cities is blurry, and many leaders claim their cities are smart without meeting a particular standard (Hollands, 2008). Thus, a need exists for a clear definition of the determinants of a smart city and a consensual and clear certification process (Allwinkle & Cruickshank, 2011; Hollands, 2008).
http://dx.doi.org/10.1016/j.jbusres.2015.01.024 0148-2963/© 2015 Elsevier Inc. All rights reserved.
Please cite this article as: Ben Letaifa, S., How to strategize smart cities: Revealing the SMART model, Journal of Business Research (2015), http:// dx.doi.org/10.1016/j.jbusres.2015.01.024
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Table 1 Definitions of smart cities in the literature. Definitions of intelligent cities
Examples
Sources
“A city that monitors and integrates conditions of all of its critical infrastructures, including roads, bridges, tunnels, rails, subways, airports, seaports, communications, water, power, even major buildings, can better organize its resources, plan its preventive maintenance activities, and monitor security aspects while maximizing services to its citizens.”
Singapore also referred as the “intelligent island” Winnipeg Toronto New Taipei City
Hall (2000) Intelligent Community Forum (2014)
“A city in which the ICT strengthen the freedom of speech and the accessibility to the public information and services.” “An instrumented, interconnected, and intelligent city. Instrumentation enables the capture and integration of live real world date through the use of sensors, kiosks, meters, personal devices, appliances, cameras, smart phones, implanted medical devices, appliances, cameras, smart phones, implanted medical devices, the web and other similar data-acquisition systems, including social networks as networks of human sensors. Interconnected means the integration of those data into an enterprise computing platform and the communication of such information among the various city services. Intelligent refers to the inclusion of complex analytics, modeling, optimization, and visualization in the operational business processes to make better operational decisions.”
Partridge (2004) Harrison et al. (2010)
Definitions of smart cities
Examples
Source
“A city well performing in a forward-looking way in economy, people, governance, mobility, environment, and living, built on the smart combination of endowments and activities of self-decisive, independent and aware citizens.” “A city that monitors and integrates conditions of all of its critical infrastructures, including roads, bridges, tunnels, rails, subways, airports, seaports, communications, water, power, even major buildings, can better organize its resources, plan its preventive maintenance activities, and monitor security aspects while maximizing services to its citizens.”
London Stockholm Amsterdam Vienna Luxembourg Turku Eindhoven Montpellier
Giffinger et al. (2007)
“The use of Smart Computing technologies to make the critical infrastructure components and services of a city-which include city administration, education, healthcare, public safety, real estate, transportation, and utilities- more intelligent, interconnected, and efficient.” “It is the implementation and deployment of information and communication technology infrastructures to support social and urban growth through improving the economy, citizens' involvement and governmental efficiency.” “Safe, secure, environmental and efficient urban centre of the future with advanced infrastructures such as sensors, electronic devices and networks to stimulate sustainable economic growth and a high quality of life.”
Washburn et al. (2010)
Hollands (2008) Caragliu, Del Bo and Nijkamp (2009) Hall (2000)
Definitions of creative cities
Examples
Sources
“A city that gives inspiration, share culture, knowledge, and life a city that motivates its inhabitants to create and flourish in their own lives.”
Montreal Berlin
Rios (2008) O'Connor and Shaw (2014) Musterd and Ostendorf (2004)
“Cities, which want to be innovative, to flourish and to offer wealth and employment to its inhabitants, feel that they have to adapt to arenas in which knowledge and creativity can develop. Culture is often added to this arena, not just as a condition to attract the creative knowledge workers, but also as a major economic sector, intricately interwoven with other sectors of the economy.” “Applied by city officials, urban planners, businesses, and anyone interested in city development today with the goal of redefining the city as a ‘creative’ center.”
Most articles concerning smart cities focus on investments in specific development areas that lead to sustainable growth and better quality of life (Dawes & Pardo, 2002). No one-size-fits-all business model exists. The variety of business models explains the plethora of concepts, including smart cities, intelligent cities, and creative cities, to cite the most common buzzwords. Table 1 provides the definitions of these concepts along with six definitions of a smart city (Nam & Pardo, 2011). 2.1. The smartness of a city Historically, intelligent city was the first concept. The intelligent city relies on top-down approaches with a focus on technology. In cities like Barcelona, technology and institutional leadership drive urban ecosystem planning (Zygiaris, 2012). Although the 22@Barcelonadistrict is successful and well documented (Bakici, Almirall, & Wareham, 2012), the one voice may exclude people who do not fit into the intelligent city vision (Vanolo, 2013). Some scholars see the intelligent city as a sort of modern, paternalistic dictatorship. The emergence of creative cities highlights the opposite trend. Creative cities such as Montreal rely on community-based and private sector initiatives, living labs, and social entrepreneurship. However, such cities lack the ability to steer and coordinate fragmented efforts
Florida (2002)
and usually foster bottom-up participation without a long-term vision. Local stakeholders spontaneously build on dynamism and creativity to reinvent the city and stimulate entrepreneurship and innovation. Creative cities face the challenge of transforming the ideation process into structural and organized innovation and change. Small and independent initiatives often fail to grow and become sustainable due to the lack of resources and formal leadership (Ben Letaifa, 2014). Scholars say a city is “smart” when that city can integrate and synchronize formal leadership and endogenous democratic participation in the IT-based urban ecosystem. Smart cities are both creative and intelligent. Smart cities are hybrid models combining democratized open innovation with central city support, coordination, and monitoring. Amsterdam, Stockholm, and London engage local communities and provide political and institutional leadership. However, these cities differ in terms of visions, strategic choices, and paths. Thus, the archetype of a smart city varies according to the identity and resources of the city. This study posits that smart cities differ from intelligent and creative cities by offering a balanced centricity among technology, institutions, and people. The focus is on neither a bottom-up nor a top-down approach. The holistic urban system, or ecosystem, allows co-creation among all stakeholders. Coordination and leadership roles can shift
Please cite this article as: Ben Letaifa, S., How to strategize smart cities: Revealing the SMART model, Journal of Business Research (2015), http:// dx.doi.org/10.1016/j.jbusres.2015.01.024
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from one actor to another depending on the identity, resources, and ecosystem readiness. 2.2. Indicators of smart cities The six most-common indicators of smart cities are smart economy, smart people, smart governance, smart mobility, smart environment, and smart living (Giffinger et al., 2007). 2.2.1. Smart people Social capital drives this dimension. Smart people are the result of ethnic and social diversity, tolerance, creativity, and engagement. Cities may offer online courses and workshops, online assistance with education, and programs and services tailored to raise social capital and qualification. Toppeta (2010) and Steinert, Maron, Richard, Veiga, and Witterns (2011) see initiatives supporting distance learning and online courses as a way to reach this result. 2.2.2. Smart governance e-services such as e-government, social media, and crowdsourcing include all parties in transparent decision-making processes leading to smart governance. 2.2.3. Smart mobility Urban planning is the best way to achieve smart mobility. Urban planning moves the focus from individual to collective modes of transportation through the extensive use of information and communications technologies (ICT). 2.2.4. Smart environment As Colldahl et al. (2013) notes, city leaders may explore opportunities in building stock and energy management areas. The use of innovative technologies, such as solar energy and other renewable sources of electricity, can also enhance the natural environment. 2.2.5. Smart living This last notion involves improving life quality in terms of services, enhancing attractiveness for tourists, and promoting social cohesion and safety. Smart living includes cultural facilities, e-health, social services, and public safety tools, such as surveillance systems and inter-emergency service networks (Toppeta, 2010). Other tools such as smart sensors and wireless platforms exist. Projects such as Smart Cities IBM (Frost & Sullivan, 2014), Smarter Neighborhoods (Siemens, 2012), and Box Projects Alcatel (Witters & Fisher, 2012) aim to develop a smart city. Scholars show an increasing interest in living labs and Free Art and Technology Lab as incubators for innovation and knowledge. Generally, living labs have diverse functions, and these labs' activities follow the user-driven innovation principle (Hielkema & Hongisto, 2012). Such initiatives benefit from innovation platforms from companies such as Nokia or Philips. The value of the Free Art and Technology Lab lies in assembling knowledge, experiences, and ideas (Hielkema & Hongisto, 2012). To reinforce development and achieve a good competitive position, cities must focus on identifying their strengths and on ensuring comparative advantages in key resources over other cities at the same level (Lazaroiu & Roscia, 2012). City rankings are a tool for identifying these assets. Such rankings use the six indicators this study presents. Interaction and integration between these smart cities lead to a complex mapping of the different layers comprising the smart city. A growing number of scholars recommend a systemic approach because smart cities function as complex systems (Weisi & Ping, 2014). Zygiaris (2012) describes the urban innovation ecosystem as part of a city's plan. According to Komninos (2008), smart cities are the result of a dense innovation ecosystem that includes wide-ranging social interactions and educated labor that generates value through information use.
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In fact, societal actors from both the public and private sectors collaborate to reach a common goal. In other words, societal actors function as an ecosystem to attain objectives through value co-creation. The actors will share this value with society for general benefit. Thus, because smart cities are part of an open innovation ecosystem (Komninos et al., 2012), which in turn fuels smart cities' development, smart city management is more complex than traditional city management. Whereas traditional city management is about urban planning, smart city management implies coordination among several stakeholders interacting in different subsystems (transportation, health, education, environment, etc.) within a single smart macrosystem that integrates full use of ICT with the city's resources and local characteristics (Weisi & Ping, 2014). For instance, smart cities strive to combine 2.0 technologies with ICT to implement urban planning through innovative and sustainable solutions and to promote socioeconomic development (Nam & Pardo, 2011). Smart cities usually underestimate social capital to the benefit of ICT, even though Berry and Glaeser (2005), for example, show that cities with available educated labor force enjoy faster urban growth. Winters (2011) supports this argument; smart cities are generally hubs of higher education and grow because of the rise of recent graduates staying in the city. Urban changes require coordination and, thus, create a high demand for skilled people to manage different systems. So, how can cities put this process into practice? Cities striving to be successfully smart must take certain actions that follow their specific strategic plans (Nam & Pardo, 2011). 3. Method Data in the study come from primary and secondary sources. The bases of this study are an extensive literature review of smart cities and an inductive qualitative research in three major cities (Montreal, London, and Stockholm). The study uses observation of the smart city projects and a longitudinal analysis of the strategizing process at different stages. Real-time and retrospective data explains how leaders implemented the smart city project and how the project evolved. Triangulation among different sites identified the strategic steps the city followed and those steps' dimensions and focus. The three main smart city ecosystems are diverse enough to allow for theorization from specific case studies. An integrative literature review validates this study's framework (Fig. 1). Data collection started in October 2013 and lasted six months. The data resulted from on-site observations in Montreal, London, and Stockholm, sixty internal documents relating to smart city projects, seventy in-depth interviews with different stakeholders, and participation in four smart city workshops. Table 2 summarizes the information sources. The case study analysis enabled the gathering of rich and fine-grained qualitative data. Iterations with the literature review enhanced data analysis and theorization. The analysis followed Miles and Huberman's (1994) methodology in terms of reducing data, processing data, and depicting and verifying conclusions. 4. Results In all three cities, public and private stakeholders collaborated to transform the cities' specific resources and challenges. In Montreal, the aging population, public infrastructure obsolescence, and the presence of major ICT providers led to a greater focus on smart health, smart grid, and smart transportation. In London, the increasing attractiveness of the financial city led to focusing on smart transportation and mobility. Finally, because of demographic and geographic constraints (archipelago), Stockholm requires better traffic management in the city center and replacement of the 100-year-old infrastructure. All three cities have dynamic ICT ecosystems. Stockholm and Montreal have specific leadership in terms of smart grid technologies and renewable energy resources.
Please cite this article as: Ben Letaifa, S., How to strategize smart cities: Revealing the SMART model, Journal of Business Research (2015), http:// dx.doi.org/10.1016/j.jbusres.2015.01.024
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Fig. 1. The SMART model.
All three cities follow a similar strategizing process. However, each city has a distinctive strategy corresponding to the city's identity and values. Table 3 illustrates how each city follows a path consistent with its specific social, cultural, and institutional context. Stockholm and London are successfully re-engineering their cities, whereas Montreal is still nurturing public and private collaboration. This comparison identifies key factors in the different stages of a city's smartization (Fig. 1). The main issues impeding this transformation are a focus on technology instead of on service provision, a shortterm and unclear vision of the future, a lack of political leadership and coordination, the absence of social and economic diversity among stakeholders engaged in creating the urban social change, and the lack of a clear plan. Despite Montreal's creativity and dynamism, the city lacks a consensual interpretation of a smart city and struggles with the lack of political stability and fragmented institutional power. In fact, in Montreal, the strategy is to capitalize on the leadership of local ICT SMEs and worldleading companies without true long-term public sponsorship. The ICT ecosystem collaborates within different independent – and sometimes competing – smart initiatives, many as public-private consortiums, and initiates the smart city vision (bottom-up approach of creative cities). Multinationals, SMEs, universities, and public institutions leverage complementary local ICT capabilities and resources, but because of frequent changes in provincial government, these organizations rarely converge or even communicate and fail to build a long-term political commitment. The vision is also techno-centric. More recently, leaders are focusing on how state-of-the-art technology can transform local public services. Finally, no clear public authority coordinates or sponsors the process. The number of governmental layers (federal, provincial, and municipal) creates gray zones regarding who has the political legitimacy and the financial capacity to steer. In contrast, Stockholm is a leading smart city that bolsters entrepreneurship and innovation. Despite the need for consensus, public and private actors manage to co-work for the city and to formulate and
Table 2 The method.
4.1. Strategy
Method
Respondents
Montreal
London
Stockholm
Total
Interviews
Public leaders Private entrepreneurs Professors Consultants
10 10 6 7 +30 3
5 4 5 6 +15 1
4 8 5 7 +15 2
19 22 16 20 60 5
Documents Workshops
implement state-of-the-art technologies and a better transportation system. Successive governments have taken over the smart city vision and plan, and they have implemented and expanded the ubiquitous municipally owned fiber-optic connectivity (since 1994) and have carried out the plan for a congestion tax deriving from a 2006 referendum. Stockholm has a simple, fair traffic-management model. Political commitment and private and community engagement have created virtuous growth circles. “We all work for Stockholm,” responds one private stakeholder on the effects of change in political parties in power. “We needed to design a traffic pricing model that would be fair. Equity and simplicity were very important even if it cost us more time and sophisticated algorithms,” states a public decision maker. The city follows an intricate tax model that includes social, geographical, and economic variables. London improved transportation and mobility with a less complex framework. Liberal values dictated efficiency instead of fairness. Leaders instituted a flat rate for everyone entering the downtown area. Support from the financial district, along with the leadership of private and public institutions, helped to monitor several smart initiatives. The Future Cities Catapult is even transferring and scaling London's smart ecosystem success to other cities in the world. These three paths correspond to five main phases identified in the SMART model (Fig. 1). SMART stands for Strategy, Multidisciplinarity, Appropriation, Roadmap, and Technology. Each strategic phase requires a different focus. First, definition drives the strategy step; second, the mindset shifts toward multidisciplinarity; third, iteration of actors' engagement and appropriation stimulation require agility; fourth, rigor allows for diligent monitoring of the roadmap; and finally, stakeholders focus on service transformation while thinking about technology. These phases comprise macro, mezzo, and micro dimensions for strategizing smart cities. The macro level comprises designing the strategy and mobilizing multidisciplinary resources. The mezzo level refers to actors' appropriation of the project and the implementation of a clear roadmap. Finally, the micro level tackles the technological transformation necessary for the implementation of new high-value-added services for residents.
Designing and steering a common vision of the city. This phase requires strong political leadership and full understanding of the community (residents, businesses, organizations) requirements to inspire the vision and address the local challenges. The identification of the objectives requires a consensual perspective on the imperatives that need addressing.
Please cite this article as: Ben Letaifa, S., How to strategize smart cities: Revealing the SMART model, Journal of Business Research (2015), http:// dx.doi.org/10.1016/j.jbusres.2015.01.024
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Table 3 Case description. City
Governance
Leadership
Vision
Values
Examples of solutions provided
Montreal
Private sector: Bottom-up approach
Private Political instability
Public sector: Top-down then ecosystemic
Public and private Political stability
London
Public sector: Top down then ecosystemic
Public and private Political stability
Consensus required and incremental change Short-term vision Social democracy: simplicity and equity Long-term vision Liberal: efficiency Mid- to long-term vision
In process
Stockholm
Technology drives the health, transportation, culture, education, and environment sectors Enhancing public services and innovation capacity Improving the city livelihood, particularly traffic management and mobility
4.2. Multidisciplinarity This dimension is about mobilizing multidisciplinary resources in the smart city co-creation process. The multidisciplinary perspective offers greater opportunities for envisioning the issues, outcomes, and resources a successful city transformation requires. The process must include and identify stakeholders from different backgrounds (public and private) because these stakeholders provide important insights. For instance, the Royal Seaport initiative and the traffic-management project in Stockholm integrated stakeholders from complementary backgrounds to yield different perspectives (urban, economic, social, political, cultural, etc.). In London, the SmartGridGB – a cross-industry group leveraging a multi-stakeholder perspective on future energy – has developed an inclusive and comprehensive debate on London's smart grid strategies, policies, and practices. 4.3. Appropriation This dimension is about gaining social acceptability among different actors to ensure project adoption and success. In this phase, iteration and agility enhance the definition and development of the project. The actors in the multidisciplinarity phase need to co-work to become active contributors and ambassadors of the smart city project. Level 39 in London and Kista Science City in Stockholm provide elaborate facilities and creative playgrounds with stimulating spaces designed as sandboxes that foster individuals' motivation to co-create. 4.4. Roadmap After the appropriation phase, the project requires detailing of activities' workflow. The objective is to identify the adequate steps to transform the city. In other words, an action plan should define all projects for different services (smart transportation, smart education, smart health, etc.). 4.5. Technology Smart cities require enabling or transformative technologies; nevertheless, this dimension comes after the strategic plan and the outcomes of the city transformation are clear. Technology improves livability but technology should not be a goal. Better infrastructure and technologies improve customer experience (e.g., smart mobility or smart health). Thus, the customer experience drives technology choice (Gummesson, 2014). 4.6. Implications for public leaders Public leaders usually think that technology drives environmental, social, and economic change and development. The SMART model nuances this perspective by recognizing the enabling and transformative role of technology once the previous strategic steps are complete.
Complex fair pricing model according to several sociodemographic criteria Flat rate pricing model for traffic management
Many public leaders struggle with city transformation, which needs a healthy economy, effective use of real-time data intelligence, and stakeholders co-defining a vision that aligns with the city's identity and human, natural, and economic resources (Zygiaris, 2012). The SMART model shows leaders where to start and what steps to follow. Cities and public leaders should facilitate social change with the collaboration of private firms and local universities (Schaffers, Komninos, & Pallot, 2012). 4.7. Implications for scholars Scholars need to acknowledge further strategies of city transformation beyond top-down and bottom-up models. Nowadays, cities engage in increasingly open and user-driven ecosystems that fall between technology push and application pull (Schaffers et al., 2012). The SMART model provides a first milestone to build on. Further analysis regarding decentralization and coordination of city smartization requires new frameworks. 4.8. Concluding remarks The role of cities in fostering socioeconomic and technological development is growing considerably. Cities act as magnets of virtuous socioeconomic growth cycles (Kourtit & Nijkamp, 2013). Scholars need to move beyond urban and economic research to embrace management and interdisciplinary perspectives, while understanding how these complex ecosystems integrate social, economic, ecological, and political subsystems. Interconnections between cities create a global smart innovation ecosystem within which these cities compete and cooperate; the current literature explores only the tip of the smart city iceberg. References Allwinkle, S., & Cruickshank, P. (2011). Creating smarter cities: An overview. Journal of Urban Technology, 18(2), 1–16. Bakici, T., Almirall, E., & Wareham, J. (2012). A smart city initiative: The case of Barcelona. Journal of the Knowledge Economy, 4(2), 135–148. Ben Letaifa, S. (2014). The uneasy transition from supply chains to ecosystems. Management Decision, 52(2), 278–295. Berry, C., & Glaeser, E. (2005). The divergence of human capital levels across cities. Regional Science, 84(3), 407–444. Caragliu, A., Del Bo, C., & Nijkamp, P. (2009). Smart cities in Europe. Vrije Universiteit. Faculty of Economics and Business Administration retrieved retrieved from https://ideas. repec.org/p/vua/wpaper/2009–48.html. Colldahl, C., Frey, S., & Kelemen, J. (2013). Smart cities: Strategic sustainable development for an urban world. (Master's dissertation) Karlskrona, Sweden: Blekinge Institute of Technology. Dawes, S., & Pardo, T. (2002). Building collaborative digital government systems. Advances in Digital Government, 26, 259–273. Oxford Economics (2011). The new digital economy: How it will transform business. Oxford: Oxford Economics. Florida, R. (2002). The rise of the creative class and how it's transforming work, leisure, community, and everyday life. New York: Basic Books. Frost & Sullivan (2014). IBM 2014 global best-in-class smart city integrator visionary innovation leadership award. Palgrave Macmillan, 1–7. Giffinger, R., Fertner, C., Kramar, H., Kalasek, R., Pichler-Milanovic, N., & Meijers, E. (2007). Smart cities—Ranking of European medium-sized cities (Report). Vienna University of Technology (Retrieved from http://www.smart-cities.eu/download/smart_cities_ final_report.pdf).
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Journal of Business Research
How to strategize smart cities: Revealing the SMART model☆ Soumaya Ben Letaifa ⁎ Université du Québec à Montréal, Canada
a r t i c l e
i n f o
Article history: Received February 2014 Received in revised form October 2014 Accepted January 2015 Available online xxxx Keywords: Smart city Implementation Strategy Methodology Framework
a b s t r a c t The purpose of this study is to clarify how to design and implement strategies for building smart cities. Despite extensive research on cities' successful transformation into smart cities, a gap exists on how these cities' services shift toward smart services and on the methodology that the cities follow in transforming these services. This qualitative study builds on an integrative literature review and case studies to propose a methodological framework for the implementation of smart cities. © 2015 Elsevier Inc. All rights reserved.
1. Introduction The world's urban population will double from 2010 (2.6 billion) to 2050 (5.2 billion) (United Nations, 2011). Cities will face challenges concerning growth, performance, competitiveness, and residents' livelihoods (McKinsey & Company, 2013). Therefore, leaders must design new strategies to enhance city performance and sustainability. Many leaders choose to transform cities into “smart cities,” “intelligent cities,” or even “creative cities” (Table 1). These labels refer to new socioeconomic environments in which citizens, enterprises, and governments can more efficiently access services and resources. Many studies rank cities according to social, economic, and environmental criteria and describe well-performing cities. However, few authors tackle how to transform these cities and leaders' strategies for such change (McKinsey & Company, 2013). Because cities have diverse contexts, sizes, and resources, a need exists for a holistic and comprehensive framework that conceptualizes different components of a smart city and explains the strategic steps to follow. The framework should integrate several building blocks in one “IT-based innovation urban ecosystem” (Zygiaris, 2012, p.218). Although these components include technology, people, and institutions (Colldahl, Frey, & Kelemen, 2013), the literature usually focuses on technology's dominant role. Indeed, smart technologies transform cities' public and private services by integrating real-time communications,
☆ The author is grateful to contributions from the assistant Leslie Mbimbi, University of Quebec at Montreal, and Professor Alicia Mas-Tur, University of Valencia, for their careful reading and suggestions. Please send correspondence to Soumaya Ben Letaifa, CP 8888 succursale centreville Montréal, H3C3P8, QC Canada. ⁎ Corresponding author. E-mail address: [email protected].
citizens' needs, and information and by enhancing livability. In a period of sluggish growth, key technology adoption offers extraordinary opportunities for cities and can spark a new wave of wealth creation (Oxford Economics, 2011). The need to balance social development and economic growth in a context of high urbanization is the main driver of the worldwide interest in smart cities. Improving energy use, healthcare, transportation, education, and services entails the design of a strategy that integrates all of these sectors in a global and well-articulated systemic vision. Many scholars, however, view the city as a collective entity, reflecting a single homogeneous body with one voice (Vanolo, 2013). Despite growing interest, the management and marketing literature practically ignores the process of strategizing smart cities. This study analyzes cases of smart cities to address two important questions that management and marketing scholars and practitioners fail to answer: How do cities become smart cities? How do leaders strategize such projects?
2. Intelligent, creative, and smart cities Smart city is a relatively new concept that is highly context dependent (country, government, natural resources, IT knowledge, and capacities) (Weisi & Ping, 2014). The literature acknowledges the lack of consensus on how to define or classify smart cities (Ponting, 2013). The line between smart cities and similar concepts such as creative and intelligent cities is blurry, and many leaders claim their cities are smart without meeting a particular standard (Hollands, 2008). Thus, a need exists for a clear definition of the determinants of a smart city and a consensual and clear certification process (Allwinkle & Cruickshank, 2011; Hollands, 2008).
http://dx.doi.org/10.1016/j.jbusres.2015.01.024 0148-2963/© 2015 Elsevier Inc. All rights reserved.
Please cite this article as: Ben Letaifa, S., How to strategize smart cities: Revealing the SMART model, Journal of Business Research (2015), http:// dx.doi.org/10.1016/j.jbusres.2015.01.024
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Table 1 Definitions of smart cities in the literature. Definitions of intelligent cities
Examples
Sources
“A city that monitors and integrates conditions of all of its critical infrastructures, including roads, bridges, tunnels, rails, subways, airports, seaports, communications, water, power, even major buildings, can better organize its resources, plan its preventive maintenance activities, and monitor security aspects while maximizing services to its citizens.”
Singapore also referred as the “intelligent island” Winnipeg Toronto New Taipei City
Hall (2000) Intelligent Community Forum (2014)
“A city in which the ICT strengthen the freedom of speech and the accessibility to the public information and services.” “An instrumented, interconnected, and intelligent city. Instrumentation enables the capture and integration of live real world date through the use of sensors, kiosks, meters, personal devices, appliances, cameras, smart phones, implanted medical devices, appliances, cameras, smart phones, implanted medical devices, the web and other similar data-acquisition systems, including social networks as networks of human sensors. Interconnected means the integration of those data into an enterprise computing platform and the communication of such information among the various city services. Intelligent refers to the inclusion of complex analytics, modeling, optimization, and visualization in the operational business processes to make better operational decisions.”
Partridge (2004) Harrison et al. (2010)
Definitions of smart cities
Examples
Source
“A city well performing in a forward-looking way in economy, people, governance, mobility, environment, and living, built on the smart combination of endowments and activities of self-decisive, independent and aware citizens.” “A city that monitors and integrates conditions of all of its critical infrastructures, including roads, bridges, tunnels, rails, subways, airports, seaports, communications, water, power, even major buildings, can better organize its resources, plan its preventive maintenance activities, and monitor security aspects while maximizing services to its citizens.”
London Stockholm Amsterdam Vienna Luxembourg Turku Eindhoven Montpellier
Giffinger et al. (2007)
“The use of Smart Computing technologies to make the critical infrastructure components and services of a city-which include city administration, education, healthcare, public safety, real estate, transportation, and utilities- more intelligent, interconnected, and efficient.” “It is the implementation and deployment of information and communication technology infrastructures to support social and urban growth through improving the economy, citizens' involvement and governmental efficiency.” “Safe, secure, environmental and efficient urban centre of the future with advanced infrastructures such as sensors, electronic devices and networks to stimulate sustainable economic growth and a high quality of life.”
Washburn et al. (2010)
Hollands (2008) Caragliu, Del Bo and Nijkamp (2009) Hall (2000)
Definitions of creative cities
Examples
Sources
“A city that gives inspiration, share culture, knowledge, and life a city that motivates its inhabitants to create and flourish in their own lives.”
Montreal Berlin
Rios (2008) O'Connor and Shaw (2014) Musterd and Ostendorf (2004)
“Cities, which want to be innovative, to flourish and to offer wealth and employment to its inhabitants, feel that they have to adapt to arenas in which knowledge and creativity can develop. Culture is often added to this arena, not just as a condition to attract the creative knowledge workers, but also as a major economic sector, intricately interwoven with other sectors of the economy.” “Applied by city officials, urban planners, businesses, and anyone interested in city development today with the goal of redefining the city as a ‘creative’ center.”
Most articles concerning smart cities focus on investments in specific development areas that lead to sustainable growth and better quality of life (Dawes & Pardo, 2002). No one-size-fits-all business model exists. The variety of business models explains the plethora of concepts, including smart cities, intelligent cities, and creative cities, to cite the most common buzzwords. Table 1 provides the definitions of these concepts along with six definitions of a smart city (Nam & Pardo, 2011). 2.1. The smartness of a city Historically, intelligent city was the first concept. The intelligent city relies on top-down approaches with a focus on technology. In cities like Barcelona, technology and institutional leadership drive urban ecosystem planning (Zygiaris, 2012). Although the 22@Barcelonadistrict is successful and well documented (Bakici, Almirall, & Wareham, 2012), the one voice may exclude people who do not fit into the intelligent city vision (Vanolo, 2013). Some scholars see the intelligent city as a sort of modern, paternalistic dictatorship. The emergence of creative cities highlights the opposite trend. Creative cities such as Montreal rely on community-based and private sector initiatives, living labs, and social entrepreneurship. However, such cities lack the ability to steer and coordinate fragmented efforts
Florida (2002)
and usually foster bottom-up participation without a long-term vision. Local stakeholders spontaneously build on dynamism and creativity to reinvent the city and stimulate entrepreneurship and innovation. Creative cities face the challenge of transforming the ideation process into structural and organized innovation and change. Small and independent initiatives often fail to grow and become sustainable due to the lack of resources and formal leadership (Ben Letaifa, 2014). Scholars say a city is “smart” when that city can integrate and synchronize formal leadership and endogenous democratic participation in the IT-based urban ecosystem. Smart cities are both creative and intelligent. Smart cities are hybrid models combining democratized open innovation with central city support, coordination, and monitoring. Amsterdam, Stockholm, and London engage local communities and provide political and institutional leadership. However, these cities differ in terms of visions, strategic choices, and paths. Thus, the archetype of a smart city varies according to the identity and resources of the city. This study posits that smart cities differ from intelligent and creative cities by offering a balanced centricity among technology, institutions, and people. The focus is on neither a bottom-up nor a top-down approach. The holistic urban system, or ecosystem, allows co-creation among all stakeholders. Coordination and leadership roles can shift
Please cite this article as: Ben Letaifa, S., How to strategize smart cities: Revealing the SMART model, Journal of Business Research (2015), http:// dx.doi.org/10.1016/j.jbusres.2015.01.024
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from one actor to another depending on the identity, resources, and ecosystem readiness. 2.2. Indicators of smart cities The six most-common indicators of smart cities are smart economy, smart people, smart governance, smart mobility, smart environment, and smart living (Giffinger et al., 2007). 2.2.1. Smart people Social capital drives this dimension. Smart people are the result of ethnic and social diversity, tolerance, creativity, and engagement. Cities may offer online courses and workshops, online assistance with education, and programs and services tailored to raise social capital and qualification. Toppeta (2010) and Steinert, Maron, Richard, Veiga, and Witterns (2011) see initiatives supporting distance learning and online courses as a way to reach this result. 2.2.2. Smart governance e-services such as e-government, social media, and crowdsourcing include all parties in transparent decision-making processes leading to smart governance. 2.2.3. Smart mobility Urban planning is the best way to achieve smart mobility. Urban planning moves the focus from individual to collective modes of transportation through the extensive use of information and communications technologies (ICT). 2.2.4. Smart environment As Colldahl et al. (2013) notes, city leaders may explore opportunities in building stock and energy management areas. The use of innovative technologies, such as solar energy and other renewable sources of electricity, can also enhance the natural environment. 2.2.5. Smart living This last notion involves improving life quality in terms of services, enhancing attractiveness for tourists, and promoting social cohesion and safety. Smart living includes cultural facilities, e-health, social services, and public safety tools, such as surveillance systems and inter-emergency service networks (Toppeta, 2010). Other tools such as smart sensors and wireless platforms exist. Projects such as Smart Cities IBM (Frost & Sullivan, 2014), Smarter Neighborhoods (Siemens, 2012), and Box Projects Alcatel (Witters & Fisher, 2012) aim to develop a smart city. Scholars show an increasing interest in living labs and Free Art and Technology Lab as incubators for innovation and knowledge. Generally, living labs have diverse functions, and these labs' activities follow the user-driven innovation principle (Hielkema & Hongisto, 2012). Such initiatives benefit from innovation platforms from companies such as Nokia or Philips. The value of the Free Art and Technology Lab lies in assembling knowledge, experiences, and ideas (Hielkema & Hongisto, 2012). To reinforce development and achieve a good competitive position, cities must focus on identifying their strengths and on ensuring comparative advantages in key resources over other cities at the same level (Lazaroiu & Roscia, 2012). City rankings are a tool for identifying these assets. Such rankings use the six indicators this study presents. Interaction and integration between these smart cities lead to a complex mapping of the different layers comprising the smart city. A growing number of scholars recommend a systemic approach because smart cities function as complex systems (Weisi & Ping, 2014). Zygiaris (2012) describes the urban innovation ecosystem as part of a city's plan. According to Komninos (2008), smart cities are the result of a dense innovation ecosystem that includes wide-ranging social interactions and educated labor that generates value through information use.
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In fact, societal actors from both the public and private sectors collaborate to reach a common goal. In other words, societal actors function as an ecosystem to attain objectives through value co-creation. The actors will share this value with society for general benefit. Thus, because smart cities are part of an open innovation ecosystem (Komninos et al., 2012), which in turn fuels smart cities' development, smart city management is more complex than traditional city management. Whereas traditional city management is about urban planning, smart city management implies coordination among several stakeholders interacting in different subsystems (transportation, health, education, environment, etc.) within a single smart macrosystem that integrates full use of ICT with the city's resources and local characteristics (Weisi & Ping, 2014). For instance, smart cities strive to combine 2.0 technologies with ICT to implement urban planning through innovative and sustainable solutions and to promote socioeconomic development (Nam & Pardo, 2011). Smart cities usually underestimate social capital to the benefit of ICT, even though Berry and Glaeser (2005), for example, show that cities with available educated labor force enjoy faster urban growth. Winters (2011) supports this argument; smart cities are generally hubs of higher education and grow because of the rise of recent graduates staying in the city. Urban changes require coordination and, thus, create a high demand for skilled people to manage different systems. So, how can cities put this process into practice? Cities striving to be successfully smart must take certain actions that follow their specific strategic plans (Nam & Pardo, 2011). 3. Method Data in the study come from primary and secondary sources. The bases of this study are an extensive literature review of smart cities and an inductive qualitative research in three major cities (Montreal, London, and Stockholm). The study uses observation of the smart city projects and a longitudinal analysis of the strategizing process at different stages. Real-time and retrospective data explains how leaders implemented the smart city project and how the project evolved. Triangulation among different sites identified the strategic steps the city followed and those steps' dimensions and focus. The three main smart city ecosystems are diverse enough to allow for theorization from specific case studies. An integrative literature review validates this study's framework (Fig. 1). Data collection started in October 2013 and lasted six months. The data resulted from on-site observations in Montreal, London, and Stockholm, sixty internal documents relating to smart city projects, seventy in-depth interviews with different stakeholders, and participation in four smart city workshops. Table 2 summarizes the information sources. The case study analysis enabled the gathering of rich and fine-grained qualitative data. Iterations with the literature review enhanced data analysis and theorization. The analysis followed Miles and Huberman's (1994) methodology in terms of reducing data, processing data, and depicting and verifying conclusions. 4. Results In all three cities, public and private stakeholders collaborated to transform the cities' specific resources and challenges. In Montreal, the aging population, public infrastructure obsolescence, and the presence of major ICT providers led to a greater focus on smart health, smart grid, and smart transportation. In London, the increasing attractiveness of the financial city led to focusing on smart transportation and mobility. Finally, because of demographic and geographic constraints (archipelago), Stockholm requires better traffic management in the city center and replacement of the 100-year-old infrastructure. All three cities have dynamic ICT ecosystems. Stockholm and Montreal have specific leadership in terms of smart grid technologies and renewable energy resources.
Please cite this article as: Ben Letaifa, S., How to strategize smart cities: Revealing the SMART model, Journal of Business Research (2015), http:// dx.doi.org/10.1016/j.jbusres.2015.01.024
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Fig. 1. The SMART model.
All three cities follow a similar strategizing process. However, each city has a distinctive strategy corresponding to the city's identity and values. Table 3 illustrates how each city follows a path consistent with its specific social, cultural, and institutional context. Stockholm and London are successfully re-engineering their cities, whereas Montreal is still nurturing public and private collaboration. This comparison identifies key factors in the different stages of a city's smartization (Fig. 1). The main issues impeding this transformation are a focus on technology instead of on service provision, a shortterm and unclear vision of the future, a lack of political leadership and coordination, the absence of social and economic diversity among stakeholders engaged in creating the urban social change, and the lack of a clear plan. Despite Montreal's creativity and dynamism, the city lacks a consensual interpretation of a smart city and struggles with the lack of political stability and fragmented institutional power. In fact, in Montreal, the strategy is to capitalize on the leadership of local ICT SMEs and worldleading companies without true long-term public sponsorship. The ICT ecosystem collaborates within different independent – and sometimes competing – smart initiatives, many as public-private consortiums, and initiates the smart city vision (bottom-up approach of creative cities). Multinationals, SMEs, universities, and public institutions leverage complementary local ICT capabilities and resources, but because of frequent changes in provincial government, these organizations rarely converge or even communicate and fail to build a long-term political commitment. The vision is also techno-centric. More recently, leaders are focusing on how state-of-the-art technology can transform local public services. Finally, no clear public authority coordinates or sponsors the process. The number of governmental layers (federal, provincial, and municipal) creates gray zones regarding who has the political legitimacy and the financial capacity to steer. In contrast, Stockholm is a leading smart city that bolsters entrepreneurship and innovation. Despite the need for consensus, public and private actors manage to co-work for the city and to formulate and
Table 2 The method.
4.1. Strategy
Method
Respondents
Montreal
London
Stockholm
Total
Interviews
Public leaders Private entrepreneurs Professors Consultants
10 10 6 7 +30 3
5 4 5 6 +15 1
4 8 5 7 +15 2
19 22 16 20 60 5
Documents Workshops
implement state-of-the-art technologies and a better transportation system. Successive governments have taken over the smart city vision and plan, and they have implemented and expanded the ubiquitous municipally owned fiber-optic connectivity (since 1994) and have carried out the plan for a congestion tax deriving from a 2006 referendum. Stockholm has a simple, fair traffic-management model. Political commitment and private and community engagement have created virtuous growth circles. “We all work for Stockholm,” responds one private stakeholder on the effects of change in political parties in power. “We needed to design a traffic pricing model that would be fair. Equity and simplicity were very important even if it cost us more time and sophisticated algorithms,” states a public decision maker. The city follows an intricate tax model that includes social, geographical, and economic variables. London improved transportation and mobility with a less complex framework. Liberal values dictated efficiency instead of fairness. Leaders instituted a flat rate for everyone entering the downtown area. Support from the financial district, along with the leadership of private and public institutions, helped to monitor several smart initiatives. The Future Cities Catapult is even transferring and scaling London's smart ecosystem success to other cities in the world. These three paths correspond to five main phases identified in the SMART model (Fig. 1). SMART stands for Strategy, Multidisciplinarity, Appropriation, Roadmap, and Technology. Each strategic phase requires a different focus. First, definition drives the strategy step; second, the mindset shifts toward multidisciplinarity; third, iteration of actors' engagement and appropriation stimulation require agility; fourth, rigor allows for diligent monitoring of the roadmap; and finally, stakeholders focus on service transformation while thinking about technology. These phases comprise macro, mezzo, and micro dimensions for strategizing smart cities. The macro level comprises designing the strategy and mobilizing multidisciplinary resources. The mezzo level refers to actors' appropriation of the project and the implementation of a clear roadmap. Finally, the micro level tackles the technological transformation necessary for the implementation of new high-value-added services for residents.
Designing and steering a common vision of the city. This phase requires strong political leadership and full understanding of the community (residents, businesses, organizations) requirements to inspire the vision and address the local challenges. The identification of the objectives requires a consensual perspective on the imperatives that need addressing.
Please cite this article as: Ben Letaifa, S., How to strategize smart cities: Revealing the SMART model, Journal of Business Research (2015), http:// dx.doi.org/10.1016/j.jbusres.2015.01.024
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Table 3 Case description. City
Governance
Leadership
Vision
Values
Examples of solutions provided
Montreal
Private sector: Bottom-up approach
Private Political instability
Public sector: Top-down then ecosystemic
Public and private Political stability
London
Public sector: Top down then ecosystemic
Public and private Political stability
Consensus required and incremental change Short-term vision Social democracy: simplicity and equity Long-term vision Liberal: efficiency Mid- to long-term vision
In process
Stockholm
Technology drives the health, transportation, culture, education, and environment sectors Enhancing public services and innovation capacity Improving the city livelihood, particularly traffic management and mobility
4.2. Multidisciplinarity This dimension is about mobilizing multidisciplinary resources in the smart city co-creation process. The multidisciplinary perspective offers greater opportunities for envisioning the issues, outcomes, and resources a successful city transformation requires. The process must include and identify stakeholders from different backgrounds (public and private) because these stakeholders provide important insights. For instance, the Royal Seaport initiative and the traffic-management project in Stockholm integrated stakeholders from complementary backgrounds to yield different perspectives (urban, economic, social, political, cultural, etc.). In London, the SmartGridGB – a cross-industry group leveraging a multi-stakeholder perspective on future energy – has developed an inclusive and comprehensive debate on London's smart grid strategies, policies, and practices. 4.3. Appropriation This dimension is about gaining social acceptability among different actors to ensure project adoption and success. In this phase, iteration and agility enhance the definition and development of the project. The actors in the multidisciplinarity phase need to co-work to become active contributors and ambassadors of the smart city project. Level 39 in London and Kista Science City in Stockholm provide elaborate facilities and creative playgrounds with stimulating spaces designed as sandboxes that foster individuals' motivation to co-create. 4.4. Roadmap After the appropriation phase, the project requires detailing of activities' workflow. The objective is to identify the adequate steps to transform the city. In other words, an action plan should define all projects for different services (smart transportation, smart education, smart health, etc.). 4.5. Technology Smart cities require enabling or transformative technologies; nevertheless, this dimension comes after the strategic plan and the outcomes of the city transformation are clear. Technology improves livability but technology should not be a goal. Better infrastructure and technologies improve customer experience (e.g., smart mobility or smart health). Thus, the customer experience drives technology choice (Gummesson, 2014). 4.6. Implications for public leaders Public leaders usually think that technology drives environmental, social, and economic change and development. The SMART model nuances this perspective by recognizing the enabling and transformative role of technology once the previous strategic steps are complete.
Complex fair pricing model according to several sociodemographic criteria Flat rate pricing model for traffic management
Many public leaders struggle with city transformation, which needs a healthy economy, effective use of real-time data intelligence, and stakeholders co-defining a vision that aligns with the city's identity and human, natural, and economic resources (Zygiaris, 2012). The SMART model shows leaders where to start and what steps to follow. Cities and public leaders should facilitate social change with the collaboration of private firms and local universities (Schaffers, Komninos, & Pallot, 2012). 4.7. Implications for scholars Scholars need to acknowledge further strategies of city transformation beyond top-down and bottom-up models. Nowadays, cities engage in increasingly open and user-driven ecosystems that fall between technology push and application pull (Schaffers et al., 2012). The SMART model provides a first milestone to build on. Further analysis regarding decentralization and coordination of city smartization requires new frameworks. 4.8. Concluding remarks The role of cities in fostering socioeconomic and technological development is growing considerably. Cities act as magnets of virtuous socioeconomic growth cycles (Kourtit & Nijkamp, 2013). Scholars need to move beyond urban and economic research to embrace management and interdisciplinary perspectives, while understanding how these complex ecosystems integrate social, economic, ecological, and political subsystems. Interconnections between cities create a global smart innovation ecosystem within which these cities compete and cooperate; the current literature explores only the tip of the smart city iceberg. References Allwinkle, S., & Cruickshank, P. (2011). Creating smarter cities: An overview. Journal of Urban Technology, 18(2), 1–16. Bakici, T., Almirall, E., & Wareham, J. (2012). A smart city initiative: The case of Barcelona. Journal of the Knowledge Economy, 4(2), 135–148. Ben Letaifa, S. (2014). The uneasy transition from supply chains to ecosystems. Management Decision, 52(2), 278–295. Berry, C., & Glaeser, E. (2005). The divergence of human capital levels across cities. Regional Science, 84(3), 407–444. Caragliu, A., Del Bo, C., & Nijkamp, P. (2009). Smart cities in Europe. Vrije Universiteit. Faculty of Economics and Business Administration retrieved retrieved from https://ideas. repec.org/p/vua/wpaper/2009–48.html. Colldahl, C., Frey, S., & Kelemen, J. (2013). Smart cities: Strategic sustainable development for an urban world. (Master's dissertation) Karlskrona, Sweden: Blekinge Institute of Technology. Dawes, S., & Pardo, T. (2002). Building collaborative digital government systems. Advances in Digital Government, 26, 259–273. Oxford Economics (2011). The new digital economy: How it will transform business. Oxford: Oxford Economics. Florida, R. (2002). The rise of the creative class and how it's transforming work, leisure, community, and everyday life. New York: Basic Books. Frost & Sullivan (2014). IBM 2014 global best-in-class smart city integrator visionary innovation leadership award. Palgrave Macmillan, 1–7. Giffinger, R., Fertner, C., Kramar, H., Kalasek, R., Pichler-Milanovic, N., & Meijers, E. (2007). Smart cities—Ranking of European medium-sized cities (Report). Vienna University of Technology (Retrieved from http://www.smart-cities.eu/download/smart_cities_ final_report.pdf).
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Please cite this article as: Ben Letaifa, S., How to strategize smart cities: Revealing the SMART model, Journal of Business Research (2015), http:// dx.doi.org/10.1016/j.jbusres.2015.01.024