How Smart Cities transform operations models - A new research agenda for Operations Management in the digital economy
The Smart City, where traditional city services and infrastructures are transformed by the integration of digital technology, is a growing phenomenon that is redefining the characteristics of operations models. This paper looks at how operations managers can capitalise on the opportunities the smart city concept is unveiling.
Local and national governments around the world face huge challenges in addressing the services needs and environmental issues that busy, growing modern cities present. Effective and efficient operations models are required, both for the management of urban infrastructure and for the production and delivery of products and services dependent on them.
One solution has been to employ the power of Information and Communication Technologies (ICTs), enabling authorities to incorporate sophisticated technology into their existing urban infrastructure and services.
The integration of these ICTs into urban infrastructures has led to the development of the smart city concept. Smart cities can be defined as places where traditional services are made more efficient through the use and integration of digital technology.
This integration has three main effects:
(i) It improves the efficiency and effectiveness of public services such as utilities and healthcare.
(ii) It enables the creation of innovative, disruptive services (such as Uber).
(iii) It encourages the update of existing operations models by unlocking the economic value of resources within the city (such as how Airbnb has allowed people to profit from letting out their homes).
In each of these cases, smart cities are facilitating the transformation of operations models, by addressing traditional operational problems and resource constraints in urban settings in an innovative way, and developing new ways of value creation and delivery. This paper looks at how they achieve this.
The paper discusses the origin of the smart cities concept and reviews alternative notions of the phenomenon. It then proposes a conceptual framework which highlights the role that operations management will play if a firm is to achieve operational transformation in a smart city. It proposes that smart cities enable the development of new operations models by re-defining three central characteristics: scalability, analytical output, and connectivity. An evaluative approach of these new models of operation is given, where their feasibility, vulnerability and acceptability is assessed.
This paper also presents three case studies that serve as examples of new operations models in the digital economy. The companies featured are Uber, Airbnb, and Telehealth. They illustrate the potential of smart cities to enable new operations models across different sectors.
As the prominence of smart cities continues to develop and stakeholder groups become increasingly engaged, there is considerable incentive for operations managers to consider the opportunities and challenges their processes and staff face, and also the tools and frameworks they deploy for strategic and operational decision making. There is potential not only for improving existing operations, but for genuine transformation of their operations models and possibly even the development of radically new ones.
The framework presented in this paper could help operations managers to address the conceptual and practical questions when developing new operations models. The accepted version of the paper is available for download at the link below. The paper was published in Production Planning & Control.