Potential enablers for innovation in Smart Cities

-Authored by Arindam Guha, Partner, Deloitte India The Smart Cities Mission, which will complete four years in June 2019, has received a lot of attention for its focus on urban infrastructure upgrade and leveraging technology for municipal services. However, the one aspect which has not been talked about much is the emergence of a number of technology focused start-ups and smaller companies which have been participating in Smart City tenders across the country. Over the last few years, we have seen at least 8-10 such companies focusing on different areas like manufacturing sensors for parking or waste level monitoring in bins; app development etc. While the smaller companies have limited themselves to relatively less investment intensive areas like app development for smart parking, citizen grievance logging etc., the larger ones have gone to the extent of developing full service Internet of Things (IoT) enabled city level platforms for integration of sensor data. Many of these start-ups have not been in the spotlight since they have been members of the partnership eco-systems set up by established technology companies which have been leading the implementation consortiums or providing the back end solution platforms to these consortiums. Innovation and incubation is anyway one of the stated cornerstones of the Smart City Mission, with more than 15-20 cities planning to set up incubation centers as part of their Smart City plans. Emergence of these new companies focusing on smart city solutions has been one of the tangible impacts of the Smart City Mission along this dimension. Some cities have also been able to rope in large established technology companies as partners for setting up joint centers of excellence developing smart technology solutions. But such instances have been relatively few. The question therefore arises is how we can ensure growth and continued sustainability of this innovation eco-system?  More so in a situation where across sectors a very high proportion of new products / solutions are not able to cross the so called “Valley of Death” i.e. transition from the lab / incubation center to the commercial market. Experience in other countries and past studies highlight the need to involve all key stakeholders for any innovation eco-system to succeed, with each of them playing their respective roles. For example, if we look at the role of Government, providing furnished space with requisite connectivity & other infrastructure in the form of innovation & incubation centers can be a good starting point. However, in addition to hard infrastructure, a typical start-up would require effective handholding in “softer” issues like strategy development / business planning, tax & regulatory compliance etc. These are best provided by professional service providers on commercial basis. Consequently, involving reputed service providers for these as well as services like facilities management may be necessary. The two other important enablers for successful scaling up of these start-ups would be effective mentorship and access to capital / finance at different stages of growth. Globally, most successful incubation centers have alliances in place with reputed venture capital and private equity funds (including seed or angel investment) so that depending on their business case, start-ups being incubated have access to “intelligent money” i.e. finance as well as effective mentorship and guidance for market success and growth. The other important linkage would be that with reputed academic institutions – while all start-ups and emerging companies would have their own technology / point solution in place, they would often require integration and joint prototyping with complementary solutions (for example, sensor with IoT platform) in a test bed / laboratory environment as part of the overall product / solution development process. This is where collaborations with institutions like the IITs, IISc etc. could be particularly useful. Today, many of these academic institutions already have their own incubation centers and hence, putting in place win-win collaborations should not be difficult. The other missing piece where Government needs to take the lead role is putting in place a conducive regulatory regime for facilitating (a) development and evolution of start-up products / solutions and (b) collaboration between start-ups and other eco-system partners like established technology / other companies, academic institutions etc. In the context of smart cities, initiatives around data monetization would be a good example of the first type of intervention. A number of cities like Copen Hagen, London, New York have made select city transaction data available (while maintaining adequate privacy safeguards) to private app developers to facilitate development of new solutions / services which are then offered to citizens and businesses. Copen Hagen in fact has also appointed an external professional service provider to create an analytics store for city level data which is then monetized. Coming to the second type of intervention for fostering collaboration between eco-system partners, a good example would be the US Defence Advanced Research Projects Agency (DARPA), which is considered one of the pioneers in creating a successful innovation eco-system. One of the mechanisms through which DARPA fosters collaboration is by extending financial grant support to large global private companies providing Defence technology; reputed universities as well as start-ups & small companies for developing different components of a single product / solution. In both interventions described above i.e. the city data monetisation as well as DARPA, the intellectual property for the newly developed product / solution is jointly owned with suitable licensing arrangements for broader commercial use by the private partner. Leveraging some of these enablers may go a long way in helping institutionalise the fledgling innovation eco-system which is coming up under the Smart Cities Mission and enable it to meet one of its ancillary objectives.