Human-centered real estate: Stay in the industry trend with CHAOS solutions
In a recent edition of McKinsey’s new series “The Next Normal”, leading executives and McKinsey experts discuss the future of the real estate industry. While
By Roope Mokka from Demos Helsinki
All cities of the century are plagued with one very particular disease. It is the disease of best cities. It manifests in feelings of paranoia and inferiority. Cities feel that they are in competition with each other. Cities’ leadership needs affirmation of being the best. Seeing one’s own city being charted high on any given city ranking or index gets mayors really going.
Luckily there is a cure for this. It is the revelation that cities do not in fact simply compete with each other. They are fundamentally linked. The more linked the more successful it even seems. So the cities’ success is dependent not on how well they compete, but on how well they collaborate.
This viewpoint challenges many of the basic assumptions of cities.
Traditionally, cities have been well managed but dismally governed. Yet, it has become an empty truism to say that cities will take the role of nation-states. I absolutely disagree with this assumption, unless cities up their game politically.
There are plenty of possibilities for this, and they mean linking internationally. “Best city by all indexes”-city is quickly being replaced by thematic city-alliances which will start evolving around different topics. Autonomous transportation-cities, basic income-cities, and refugee-cities will emerge alongside C40cities and ICLEI. These networks can grow into clubs (like EU and Nato) that together decide on rules and investments.
This can eventually lead into a new power nexus. It can rebalance the city vs. nation-state battle and give new powers for cities to evolve. In other words, cities can get the powers they want not by talking to national governments, but by speaking to each other and forming bonds. This is the new system of governing networks. It is a shift away from the government hierarchies, within nation-states. Cities, unlike nation-states, do not have clear boundaries, or, to be precise, the boundaries are not as meaningful as with nation states. Cities are essentially networks that have to be governed, not managed.
In becoming network governors, cities need to change how they see their purpose. They have to move from the design and attract game to the govern and innovate game.
Currently, cities see themselves as service organisations that are there to please their “customers”.
Cities’ most valued customer has been the global mobile workforce, working in business services, finance or technology. “Best cities” have become like luxury service providers for this global knowledge elite, which makes them compete against each other. This has resulted in the global monoculture of creative cities.
At the same time the fundamentals of the success of cities are very well known. There are two things above everything: First, how well human resources are in use and second, how purposefully innovation systems the area are. Even the “best cities” score dismally on both accounts.
“Best cities” are all based on an assumption of only a small share of their population attracting the investments and, thus, creating value and bringing tax income. This “creative class” is responsible for the innovations in any given region. Yet, we are talking about a maximum 30% of the workforce (which accounts as little 15% of population, given the ageing of population and changes in work due to technology).
Serving a small fraction of global citizens is, however, not sustainable if cities want to rule the world, or even govern effectively in their own regions.
To become the global powerhouses that everyone predicts, cities will have to get political; they will have to understand that instead of a linear race, the world of cities is multidimensional. There are many ways for cities to flourish.
Getting political means changes to a few fundamentals of what running a city means:
I feel all of this will happen very soon. Nothing that I have written above is science fiction. It’s all happening in a minor scale somewhere in the globe.
In a recent edition of McKinsey’s new series “The Next Normal”, leading executives and McKinsey experts discuss the future of the real estate industry. While
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