Cities and autonomous cars: new business models and smart governance

Since 2005, Barcelona hosts the largest and most important exhibition for the mobile industry: the Mobile World Congress (MWC). After six years, in 2011, Barcelona was chosen as GSMA Mobile World Capital and will continue to be the site of GSMA Mobile World Congress through 2023. Besides the positive externalities generated into the local economy, the MWC is the annual meeting to showcase the advances of the mobile industry. In this year’s edition, cities had an important and central role during the congress especially regarding advances in the Internet of Things but more importantly in new models of mobility thanks to the rise of autonomous vehicles.

As we show in our book, mobility is a key dimension of cities. As urbanization accelerates, the demand for mobility and transportation escalates. This booming demand stresses the existing urban transportation systems and infrastructures, intensifies widespread congestion and traffic gridlock, increases road accidents, and augments CO2 emissions and air and noise pollution, which is starting to cause serious health concerns. How will our current transport systems cope with this rising demand for mobility in cities? How can city planners and mayors around the world come up with strategies and solutions that enhance sustainable and integrated urban transportation systems? What is the future of urban mobility? One of the potential answers to these challenges is the autonomous vehicle.

In a recent article at the MIT Technology Review, Jamie Condliffe states that the benefits of a car that can be driven alone are not limited to transporting people between points A and B. An autonomous car can also park alone in a place that would be a nuisance for any human driver and wait there until receiving the order to pick up a new passenger. This means that the huge amount of land currently being allocated to parking spaces in the center of the cities could be re-used for other purposes. These potential benefits are fueling a race of car-manufacturers and software developers to create a fully-autonomous vehicle. In fact, the race is going so fast that more cars than phones were connected to cell service in 2016. The need of high-speed and reliable communication (not just from car-to-car but also from car-to-infrastructure) puts pressure into cities to develop and deploy communication networks. In other words, autonomous vehicles and cities need to increase their communications and information density.

Moreover, the new urban mobility patterns force us to think about new business models. First of all, with autonomous vehicles the number of cars on the road could be reduced –leading to numerous benefits- by creating car-pooling and car-sharing systems. Of course, this change has serious implications for car-manufacturers, forcing them to move from product selling to (mobility) service providers. On the other hand, the deployment of a dense and complex network is a huge challenge for city managers. The need for public-private partnerships between city councils and ICT companies arises as one of the best solutions to deliver public and social services leveraging private knowledge and new sources of financing.

Technology seems to be –almost- in place, but one question remains unanswered: are we going to be able to implement it? To answer the question we should focus on public and private governance. Different organizational cultures and internal challenges will create barriers between the necessary collaboration of different stakeholders. Thus, it is time to think about new ways of acting and embracing smart governance as the key factor for societal progress.

About Carlos Carrasco

Carlos Carrasco Farré is a researcher at IESE Business School. Previously, he carried out a Msc in Public and Social Policy at Pompeu Fabra University and Johns Hopkins University. Additionally, he studied urban policy at The Johns Hopkins University, public finance at the London School of Economics & Political Science (LSE) and government performance at Harvard University (Harvard Kennedy School of Government). He has worked in public sector consulting, in the Barcelona Provincial Council (Economic Development Area) and as Chief Data Scientist in Eixos.cat, a company dedicated to the creation of urban economic observatories based on Open Data and Smart Geo. He has also contributed to various academic and non-academic publications and books on economics, management and urban strategy.

About Joan Enric Ricart

Joan E. Ricart, Fellow of the SMS and EURAM, is the Carl Schrøder Professor of Strategic Management and Chairman of the Strategic Management Department at the IESE Business School, University of Navarra. In this school he has been Director of the Doctoral Program (1995-2006), Associate Dean for Research (2001-2006), and Associate Director for Faculty and Research (2006-2014). He is also Vice-president of the Iberoamerican Academy of Management. He was the Founding president of the European Academy of Management (EURAM) and President of the Strategic Management Society (SMS). He was the academic director of the EIASM and member of the research committee of the EFMD. Joan E. Ricart holds a Ph.D in Managerial Economics, Northwestern University; Ph.D. in Industrial Engineering, Universitat Politècnica de Catalunya; and Ph.D. in Economics and Business Administration, Universitat Autònoma de Barcelona. He has published several books and articles in leading journals. He is Director of the Center for Globalization and Strategy, co-academic director of IESE Cities in Motion and academic director of the UN center of excellence of PPP for Cities. He is also a member of the Advisory Board of the Future of Urban Development and Service Initiative of the World Economic Forum. His current work focuses on cities, business models, and general management.

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