How to get ahead of competition in the smart city business?


There is a lot of competition in the smart city business. Everyone wants their slice of the business opportunities, but the complex environment sets companies up for a challenge. Circumstances are demanding; change is constant, cooperation is vital, technology takes leaps forward and wrong decisions have serious consequences. So, how can we successfully build cities that are smart, liveable, and more sustainable – without a crystal ball to predict future trends and developments?

Smart city development requires coordination, data sharing, and trust across a host of shareholder groups. To tackle such a complex process, we need to take the steering wheel and approach smart city development with a combination of courage and data. So, where to start and what to prioritise? We brought together smart city experts Peter Ylén from VTT, Pekka Mild from Caverion and Kensuke Nakajima from Mitsubishi to offer different angles and insight into the building blocks of a successful smart city business. 

Smart ecosystems build smart cities

Cities are the epitomes of built ecosystems. They are interconnected in numerous ways – be it through humans, transport routes, fibreoptics, or the cloud. City development also requires cooperation between very different stakeholders both within and across industries. With many shareholders that each have different agendas, coordinating projects can become difficult. Having the courage to be proactive instead of reactive is the best way to drive smart city development.

“As companies, we need to make the decisions now, as they will have a huge impact both on our business and the society as a whole. For a company this is a challenge; time spans can be short, money is scarce, and you need to make the right investments,” Peter Ylén describes. 

Sustainability means business, so we have to enable business to be sustainable.
Peter Ylén

The lucky part is, that there is no need to make decisions blindly, as there typically is a lot of hard data available for cities. Population, energy usage, waste and traffic flows, and so many other things are measured, tracked, and analysed at the city level. This data is valuable, but alone it is not enough to conduct comprehensive analyses or to build complex models and assessment tools. What is often left out are the invisible – yet very important – things like legislation, regulation, technological advances, earning logics, and consumer behaviour. 

Ylén and a team of researchers at VTT have developed a service called VTT CityTune® to include the invisible and to model different aspects of urban life and smart city planning.  

VTT CityTune® offers tools for smart city decision-making

  • Identification of complex cause-and-effect relationships
  • Building and communicating mental models
  • Understanding the long- and short-term effects 
  • Anticipating unexpected consequences 
  • Identification of leverage variables to create a positive spiral 
  • Simulation of decisions 

“VTT CityTune® is not a digital twin of a city, but a “flight simulator” for private and public sector decision makers. It allows you to see and assess variables like legislation, money, and attitudes that can be vague and difficult to measure and model. VTT CityTune® allows decision makers to run almost endless simulations and sensitivity analyses and assess how different futures and scenarios would play out,” Ylén describes. 

A model that captures the invisible benefits of smart buildings

Caverion services over 30 000 properties in Europe and is a large player in developing the field of smart built environment. The company offers smart and sustainable services to buildings, infrastructure, and industrial sites, and over 10 000 of its properties are already digitally monitored. 

Together with VTT, Caverion started an ambitious project to create an advanced model that could capture the hard-to-quantify benefits of making office buildings smarter and offer a concrete tool to support decision-making.   

“Often the most significant financial benefits stem from the factors that are hardest to capture.”
Pekka Mild

“The model was created to provide a way to simulate complex cause-effect relations over time. What we wanted, was a unique tool to “run the numbers”, explore scenarios, and support communication,” tells Pekka Mild, Senior manager of advanced analytics development at Caverion.

Research has shown that things like employee productivity and retention play much larger role than other, more tangible factors like utility savings of resource efficiency. In the case of smart buildings, the invisible factors can account for up to 90 percent of the benefits.

“Often the most significant financial benefits stem from the factors that are hardest to capture. We needed to make sure that our model could capture the impact of the intangible,” Mild explains. 

According to Mild, one of the model’s strengths is that it allows running simulations over a ten-year period and assess their monetary impact. “When making decisions about which upgrades to make, for example, the model shows that even if you don’t necessarily see the benefits immediately, they may come in a year, two or four, and accumulate over ten years,” Mild explains. 

The model has shown a lot of promise and is clearly past the proof-of-concept stage. It is not in production yet, and still needs tuning and testing. “We also need to remember that it is not a magic wand but a tool to quantify hard things and to support planning and communication.” 

Digital trust is a must in smart city management

Even with high-quality data and advanced models, the success of city planning also depends on trust. Therefore, understanding the role of trust mechanisms in urban planning is an important prerequisite for carrying out smart city projects. Kensuke Nakajima from Mitsubishi UFJ Research and Consulting (MURC) has studied the role of digital trust in the context of urban management.

“Most people recognise the importance of trust, but few people think about its definition in their daily lives,” Nakajima explains. However, for city management, understanding, earning, and maintaining citizens trust is vital. If a project is not backed up by citizens’ trust, carrying it out successfully will become next to impossible. 

Most people recognise the importance of trust, but few people think about its definition in their daily lives.

In a project done together with VTT and NEC, MURC studied citizens’ trust towards smart city management in three different cities: Helsinki,Copenhagen and Toronto. The research broke down the different elements of trust formation in city management, accounting for both cultural, historical, systemic, and social variables, and found significant differences between the Nordic cities and Toronto. 

Three steps of trustworthy urban management

  • Deep public participation from the planning stage 
  • Decentralized & open & horizontal decision-making process that is inclusive 
  • Oversight & decision-making rules for city management with authority of government organisations and citizens

“Nordic countries have a very unique trust structure,” Nakajima explains. Even though cultures of trust can be very different in cities around the world, studying cities like Helsinki or Copenhagen that have high levels of public trust can help avoid pitfalls elsewhere.

We are in the process of creating the new digital trust framework.
Kensuke Nakajima

Trust mechanisms are leverage points in either success of failure in smart city solutions. They can be laborious to quantify, but they are essential in understanding challenges and opportunities in smart city context. Without trust, we cannot build human-centred smart cities.


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Kirsi Kotilainen
Kirsi Kotilainen
Solution Sales Lead, Smart Energy and Built Environment
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