The 4 Types of Cities and How to Prepare Them for the Future

John D. Macomber at Harvard Business Review: “The prospect of urban innovation excites the imagination. But dreaming up what a “smart city” will look like in some gleaming future is, by its nature, a utopian exercise. The messy truth is that cities are not the same, and even the most innovative approach can never achieve universal impact. What’s appealing for intellectuals in Copenhagen or Amsterdam is unlikely to help millions of workers in Jakarta or Lagos. To really make a difference, private entrepreneurs and civic entrepreneurs need to match projects to specific circumstances. An effective starting point is to break cities into four segments across two distinctions: legacy vs. new cities, and developed vs. emerging economies. The opportunities to innovate will differ greatly by segment.

Segment 1: Developed Economy, Legacy City
Examples: London, Detroit, Tokyo, Singapore

Characteristics: Any intervention in a legacy city has to dismantle something that existed before — a road or building, or even a regulatory authority or an entrenched service business. Slow demographic growth in developed economies creates a zero-sum situation (which is part of why the licensed cabs vs Uber/Lyft contest is so heated). Elites live in these cities, so solutions arise that primarily help users spend their excess cash. Yelp, Zillow, and Trip Advisor are examples of innovations in this context.
Implications for city leaders: Leaders should try to establish a setting where entrepreneurs can create solutions that improve quality of life — without added government expense. …

Implications for entrepreneurs: Denizens of developed legacy cities have discretionary income. …

Segment 2: Emerging Economy, Legacy City
Examples: Mumbai, São Paolo, Jakarta

Characteristics: Most physical and institutional structures are already in place in these megacities, but with fast-growing populations and severe congestion, there is an opportunity to create value by improving efficiency and livability, and there is a market of customers with cash to pay for these benefits.

Implications for city leaders: Leaders should loosen restrictions so that private finance can invest in improvements to physical infrastructure, to better use what already exists. …

Implications for entrepreneurs: Focus on public-private partnerships (PPP). …

Segment 3: Emerging Economy, New City
Examples: Phu My Hung, Vietnam; Suzhou, China; Astana, Kazakhstan; Singapore (historically)

Characteristics: These cities tend to have high population growth and high growth rates in GDP per capita, demographic and economic tailwinds that help to boost returns. The urban areas have few existing physical or social structures to dismantle as they grow, hence fewer entrenched obstacles to new offerings. There is also immediate ROI for investments in basic services as population moves in, because they capture new revenues from new users. Finally, in these cities there is an important chance to build it right the first time, notably with respect to the roads, bridges, water, and power that will determine both economic competitiveness and quality of life for decades. The downside? If this chance is missed, new urban agglomerations will be characterized by informal sprawl and new settlements will be hard to reach after the fact with power, roads, and sanitation.
Implications for city leaders: Leaders should first focus on building hard infrastructure that will support services such as schools, hospitals, and parks. …

Implications for entrepreneurs: In these cities, it’s too soon to think about optimizing existing infrastructure or establishing amusing ways for wealthy people to spend their disposable income. …

Segment 4: Developed Economy, New City
Examples and characteristics: Such cities are very rare. All the moment, almost all self-proclaimed “new cities” in the developed world are in fact large, integrated real-estate developments with an urban theme, usually in close proximity to a true municipality. Examples of these initiatives include New Songdo City in South Korea, Masdar City in Abu Dhabi, and Hafen City Hamburg in Germany.

Implications for city leaders: These satellites of existing metropolises compete for jobs and to attract talented participants in the creative economy. ….

Implications for entrepreneurs: Align with city leaders on services that are important to knowledge workers, and help build the cities’ brand. ….

Cities are different. So are solutions….(More)