Our planet is urbanizing at a staggering rate: today, more than half the world’s population lives in cities, and the number is growing. London has grown from 1 to 8.5 million in 140 years, while Mumbai, Lagos, Istanbul and Sao Paulo have grown by at least 200,000 people per year in recent decades, with Lagos growing by 600,000 per year – a rate of 70 people per hour.

Today’s urban space is changing rapidly, as digital technologies and pervasive networks integrate with bricks and mortar. As Xerox PARC pioneer Mark Weiser once noted, “first were mainframes, each shared by lots of people. Now we are in the personal computing era, person and machine staring uneasily at each other across the desktop. Next comes ubiquitous computing, or the age of calm technology, when technology recedes into the background of our lives.” Ubiquitous computing, with its “internet of everything” corollary, is creating a new urban condition: the so-called “smart city”.

It is widely thought that smart cities can respond better to their inhabitants and their environment, becoming efficient, sustainable and liveable ecosystems. To this end, a broad spectrum of implementation models is emerging in different parts of the world. But what is the role of the government in the process of implementing smart-city developments? How can funding be used effectively, especially to promote innovation? And are huge sums of public money the right stimulant for smart cities after all?

Models from across the world

Diametric approaches are appearing between the USA and, broadly speaking, of the rest of the world. In South America, Asia and Europe, all levels of government are quickly identifying the potential of latent smart cities, and are working to channel significant investment in that direction. Rio de Janeiro is building capacity at its Smart Operations centre, Singapore is about to embark in an ambitious Smart Nation effort, and Amsterdam recently channelled €60 million into a new urban innovation centre called Amsterdam Metropolitan Solutions. The European Union’s Horizon 2020 programme has earmarked €15 billion in 2014-2016, an investment that represents a significant commitment of European resources to the idea of smart cities, especially at a time of severe fiscal constraints.

In the US, however, there is little public-sector funding, yet the general idea of smart urban space has been central to the current generation of successful start-ups. One of the latest examples is Uber, a smartphone app that lets anyone call a cab or be a driver. The company’s operations are polarizing: Uber has been the subject of protests and strikes around the world (mainly in Europe), yet it was recently valued at a stratospheric $18 billion.

Beyond Uber, the learning thermostat Nest, the apartment-sharing website Airbnb, and the just-announced “home operating system” by Apple, to name a few, attest to the new frontiers of digital information when it inhabits physical space. Similar approaches now promise to revolutionize most aspects of urban life – from commuting to energy consumption and personal health – and, as such, they are receiving eager support from venture capital funds.

That isn’t to say government should take a hands-off approach to urban development; it certainly has an important role to play. This includes supporting academic research and promoting applications in fields that might be less appealing to venture capital – unglamorous but nonetheless crucial domains such as municipal waste or water services. The public sector can also promote the use of open platforms and standards in such projects, which would speed up adoption in cities worldwide.

The city of Barcelona has made a step in this direction with its “city protocol” initiative. This brings together cities, commercial and non-profit organizations, universities and research institutions to develop a shared and interoperable set of guidelines for city transformation. Most importantly, these protocols will be multi-city, multi-culture, multi-partner and scale-free.

But all of this is working towards less top-down determinism; governments should use their funds to develop an organic, bottom-up innovation ecosystem geared toward smart cities, similar to the one that is growing in the US. This must go beyond supporting traditional incubators, and aim to produce and nurture the regulatory frameworks that allow innovations to thrive. Considering the legal hurdles that continuously plague applications like Uber or Airbnb, this level of support is sorely needed. Regulation is still vitally important, but in a more responsive way – governments can take the pulse of innovation and its impact on society, without creating unnecessary legislative constraints. However, governments will have to be nimble on their feet, responding to technologies as they emerge, and giving new developments the room to grow.

There seems to be a fine line for governments to walk as they implement smart-city strategies: they should, at all costs, steer away from the temptation to play a deterministic and top-down role. It is not their prerogative to decide what the next smart-city solution should be – or to use their citizens’ money to bolster the position of the technology multinationals that are now marketing themselves in this field. Conversely, they should create all the conditions to grow innovation ecosystems.

And here might lie another delicate balance: between smart-city efficiency and innovation. In some cases the latter will also need a good dose of chaos – the opposite of maximum optimization. The most creative solutions often emerge and thrive in less regulated and “messy” environments – in other words, “less smart” might be necessary, if “smart” is to be more than an empty label.

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Author: Professor Carlo Ratti is the director of the MIT Senseable City Laboratory, Department of Urban Studies and Planning, director of the MIT Italy Programme, and chair of the World Economic Forum’s Global Agenda Council on the Future of Cities.

Image: People walk in a park along the Hudson River across from the skyline of New York’s Lower Manhattan, in Hoboken, New Jersey, November 22, 2012. REUTERS/Gary HershornBarria