Location strategies are becoming a key factor in how businesses can compete in the digital age. Business leaders and city planners can encourage development of smart, open city ecosystems that will become epicenters of game-changing innovation and creativity, spurring start-ups and established businesses alike to succeed in the digital era.

By Michael M. Cook

THE FUTURE-PROOF CITY

The cornerstone of our modern existence – the city – is changing. And with this change comes new waves of opportunity for organizations.

May 2018

Executive SummaryThe cornerstone of our modern existence – the city – is changing. And with this change comes new

waves of opportunity for organizations.

The first industrial revolution in the late 18th century gave rise to mass migrations of workers from

rural settings to urban locales. Fast-forward 250 years, and 54% of the world’s population lives in

urban areas, and this is expected to increase to 60% by 2030.1 The city – in part as a consequence

of its own success – is now on the cusp of a huge period of change as local governments, city plan-

ners and residents look to continue building on urban strengths while mitigating the inarguable

downsides.

Central to this next wave of city development are technologies such as artificial intelligence (AI),

automation, mobile enablement, the Internet of Things (IoT) and cloud computing. Digitally inspired

change will be at the heart of the story of cities all around the world over the next 50 years.

To better understand how cities can be both catalysts for and beneficiaries of innovation, we con-

ducted in-depth interviews with five leading experts in the fields of urban design, development and

architecture (for more information, see the acknowledgments section, page 17). Through these

interviews, we examined the interplay among organizations, municipalities and individuals in creat-

ing and working in smart, open city ecosystems. It is these ecosystems that are emerging as epicen-

ters for the talent, creativity and innovation that will drive the pace of change in the Fourth Industrial

Revolution.2 Our key findings from these interviews include:

• A centrally located headquarters isn’t always the best place for innovation: As organiza-

tions seek to spur innovation and attract needed talent, they’re colocating teams with start-ups

and creativity hubs whose culture aligns with their goals. By sidling up to these outposts of inno-

vation, they’re enabling the cross-pollination of ideas and work practices in a way that wouldn’t

be possible inside “the mothership.”

• Don’t just collocate; integrate: Simply moving closer to clients, partners, employees and start-

ups isn’t sufficient; workers need to actually interact with these stakeholders to gain the benefits

of colocation. By establishing congregation areas outside of the office, city planners can encour-

age chance encounters and foster interpersonal communications among a wide swathe of work-

ers in the environs.

Digitally inspired change will be at the heart of the story of cities all around the world over the next 50 years.

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• Culture wins: To turn these interactions into something meaningful to the business, organiza-

tions need to choose a location whose culture encourages a collaborative mindset and an agile

way of working and partnering. We are seeing organizations base their location strategy more

on desired culture than on industry assimilation. Companies that might have traditionally chosen

Silicon Valley as their home, for example, are now settling in Las Vegas, Portland, Ore., Austin,

Tx., and even Phoenix, Ariz.3 While some of this movement is being driven by the lower cost of

living in these locales, the escape from a high-cost area can also radiate a new vibe that attracts

a different type of worker and encourages experimentation with new business, employment,

culture and work models.

• Smart cities are those that share data: Smart cities in and of themselves won’t drive innova-

tion and collaboration; their data, however, can spur improvements in efficiency and productiv-

ity within the cityscape. To encourage this, cities need to open up their data to the private sector,

which can then produce and sell smart city applications, enabling capabilities that elude most

municipalities.

Organizations need to choose a location whose culture encourages a collaborative mindset and an agile way of working and partnering.

COLOCATE TO INNOVATEThe places in which we work are changing dramatically. Just 20 years ago, the offices of large orga-

nizations were mainly clustered in capital cities or economic hubs, often in industry-specific regions.

From London’s banking district or New York City’s Wall Street, like-minded organizations flocked to

these districts to get close to the action, and clear lines were drawn between industries. Work took

place almost exclusively within the four walls of these offices, which were characterized by a sea of

nondescript cubicles, with leadership cocooned in isolated suites.

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Back then, offices were simply a place for employees to congregate and create output, much of

which revolved around the fulfillment of rote tasks – think of manual invoice processing within an

accounts payable department.

Now, however, we see a rapid change. Work is beginning to disperse away from these predefined

urban areas, as businesses seek colocation with sub-sectors of needed talent. Start-ups and inno-

vation centers are now springing up where the requisite talent and culture are, such as the emerg-

ing digital hubs in cities such as Bristol in England,4 Madrid in Spain

5 and Lisbon in Portugal.

6

The shift to digital, the rise of data and the growth of platforms, AI and automation, coupled with

economic growth, has fueled an intense talent war, with organizations struggling to fill vital digital

roles in areas such as big data, analytics, AI, robotics, creative, social media and digital strategy. As

such, companies are increasingly attracted to regional talent hubs within tier-1 and tier-2 cities

around the world in which they can nurture start-up-like teams within their business.7

In the UK, organizations such as Barclays and even the HM Revenue & Customs have moved internal

innovation units away from central London and into smaller cities, such as Newcastle and Bristol.8

The reasoning: Intrapreneurial teams often benefit from working outside the influence (and con-

straints) of the “mothership.” Additionally, the cultural difference within these new locations can

facilitate fresh thinking.

In many cases, these locations are chosen with colocation in mind, whether with an existing tech

community or the company’s partners, customers and suppliers. In our recent study on the chang-

ing workspace,9 respondents made clear that colocation is a major catalyst for innovation (see

Figure 1). By ensuring proximity to desired talent and key partners, these organizations hope to

encourage smoother and more meaningful interactions among these parties and establish the cre-

ative tension needed to drive next-level thinking.

Innovation Strategies Require Colocation in the Workplace

How effective are the following workplace actions/investments in helping your company develop new ideas? (“Effective” and “highly effective” responses.)

85%

76%

68%

Attractive location for desired staff profile

Close proximity to customers, suppliers, business partners and employees

Colocation with currentor potential business partners

0%

20%

40%

60%

80%

Base: 165 business decision makers

Multiple responses allowed

Source: Cognizant Center for the Future of Work

Figure 1

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COWORKING ON A CITY-WIDE SCALE

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The interest in colocation is inspiring the emergence of business clusters – a geographic concentra-

tion of interconnected businesses, suppliers and associated institutions in a particular field. Such

clusters are popping up across the globe, in areas such as Detroit, Mich., the Bay Area in San Fran-

cisco and Dubai’s Science Park, which serves the country’s entire science sector. By bringing

together market leaders and start-ups in specific industries, these clusters increase the competi-

tiveness of participating organizations on a global and local scale.

Given the economic benefits involved, city planners need to prioritize the factors that attract cus-

tomers, partners and organizations into common areas. While establishing a business cluster solves

a piece of the colocation puzzle, however, urban developers also need to consider the human ele-

ment of innovation – the ineffable quality that electrifies an area with productive energy. For that,

cities can look to the burgeoning area of the coworking model, characterized most famously by

coworking space leader WeWork.

Entrepreneurs, start-ups and skunkworks teams from established organizations are flocking to the

social, flexible office space model. By bringing together numerous workers from multiple areas of

expertise, industrial and cultural fields, coworking spaces create “positive friction,” a concept used

by Google in its office design and a proven precursor to innovation.10

11 Investment in this area bears

this out, evidenced by Softbank’s $4.4 billion investment into WeWork at the end of 2017.12

The impact of coworking spaces can now be felt on the city stage, where the area immediately sur-

rounding these flexible work spaces often serves as an ecosystem for innovation, inspired by the

resulting diversity of workers and industries.

Forward-thinking city planners are adopting some of the principles of coworking spaces by creating

multiple-use areas that create positive friction by combining leisure, shopping and business activi-

ties. These open spaces are designed for public congregation, ease of mobility and fluidity of move-

ment among citizens engaged in leisure and work activities.

Barcelona, for example, is in the process of implementing anti-zoning laws in an effort to reduce

pollution, decrease noise levels and create “citizen spaces.” The government plans to reduce traffic

in the city center by 21%, and free up road space currently occupied by automobiles.13

Such initia-

tives create more opportunity for free pedestrian movement among work, living and social spaces,

and allow for a cultural emergence among workers and city inhabitants.

The impact of coworking spaces can now be felt on the city stage, where the area immediately sur-

rounding these flexible work spaces often serves as an ecosystem for innovation, inspired by the

resulting diversity of workers and industries.

Forward-thinking city planners are adopting some of the principles of coworking spaces by creating multiple-use areas that create positive friction by combining leisure, shopping and business activi ties.

The Future-Proof City | 9

Manchester Then and Now

To further encourage positive friction in citizen’s daily lives, Barcelona’s newly developed urban

area, called 22@, is establishing multi-use buildings that combine accommodation, office space and

retail, driving the notion of anti-zoning into individual buildings. The downtown area of Manchester,

England, is being rejuvenated through similar means.

Fluidity is a key characteristic for work in the city landscape, and as an organization distributes

work around a municipality, workers need common areas of collaborative space between the office

location and the wider ecosystem (clients, partners, peers, competitors, etc.). Therefore, coworking

office space and mixed-use environments both have a role to play in city design.

Source: Getty Images. The images depict Manchester, England, circa 1890 and the present.

Quick Take

The Democratic CityMore than ever, citizens want a say in how their city evolves and how the

culture emerges. And their voices are been heard; consider the referendum

undertaken for the Olympic games in Hamburg in 2015.14 The proposal was

rejected by 51.6% of voters, thereby nullifying the advance planning that

had already gone into hosting the games. This is indicative of residents’

rejection of the long-held notion of top-down urban design.

To prevent malicious or needless restriction of development, the platform

establishes a trusted community of “makers,” creating a viable compromise

between a bottom-up and top-down approach to city planning.

The democratization of city planning can also have numerous advantages,

as well, as seen in the digital platform TransformCity, started by ex-architect

Saskia Beer.15 This platform gives citizens an inclusive say in the design and

development of city space. To prevent malicious or needless restriction of

development, the platform establishes a trusted community of “makers,”

creating a viable compromise between a bottom-up and top-down approach

to city planning. Additionally, it just makes sense to empower the very people

whose culture is impacted by city design, given that the aim of business

ecosystems is to drive economic development through culture.

Ultimately the concepts of a culturally centered, democratically designed

urban business ecosystem extrapolate into what is termed an “Open City.”

10 | The Future-Proof City

SMART CITIES FOLLOW THE DATA

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In our workspace study, we explored two different types of work that exist in offices: blue work

(creative, innovative work) and red work (rote, repetitive tasks). Likewise, the way people move

throughout a city can also be thought of in terms of red and blue movement. Blue movement would

encompass social interactions, networking, collaboration and innovation activities that workers

engage in. Red movement, on the other hand, is the commuting, administration and general tasks

citizens perform on a daily basis.

While blue movement can be enhanced by initiatives related to business clusters, colocation, democ-

ratized planning and multiple-use areas, the forces that revitalize red movement are intelligent

digital technologies.

Think of a fully connected smart city infrastructure that alerts visitors to the quickest pedestrian

routes based on footfall, traffic light timing and sidewalk conditions, or a prescriptive analytics

capability that provides alerts to the imminent failure of connected utilities. In addition to increas-

ing efficiency and productivity, such tools can also be a key factor in supporting fast growth. With

cities such as London expected to grow by 1.5 million residents by 2041,16

planners need to stream-

line traffic, foot flow and utility management to maintain a harmonious and fully functional city.

To gain the true benefits of a smart city, municipalities need to begin sharing their data, be it on living

conditions, infrastructure, public services or transport. Helsinki in Finland17 was among the first cities

to openly share its data, including procurement data, aerial photos and postal code areas. Finland’s

Tampere is another great example, as numerous applications have been launched from its open smart

city data hub, addressing smart mobility, smart buildings and even applications for resident input on

city design/functionality. For example, the backbone of smart public transportation in Tampere will be

the tramway running through the city by 2021. The busiest points along the tramway will be turned

into mobility hubs that will have robotic bus feeder traffic for the tram, informative tram stops, and

both physical and digital services that enable a smooth-running experience.18

By taking an open approach to data sharing, municipalities can encourage the private sector to

develop apps, resulting in enhanced experiences made possible through market competition.

Ultimately, the creation of a smart city is not an endpoint in itself but is, instead, a facilitator of

efficient, productive and safe movement within municipal borders that contain a smart ecosystem.

It is these ecosystems that will ultimately power innovation and collaboration in the Fourth Indus-

trial Revolution.

By taking an open approach to data sharing, municipalities can encourage the private sector to develop apps, resulting in enhanced experiences made possible through market competition.

LEVERAGING THE CITY FOR FUTURE SUCCESS

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1414 | The Future-Proof City

Cities are becoming synonymous with digital innovation hubs, providing access to talent and ideas. As a result, the space in which we work matters more than ever.

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When formulating a location strategy that fosters innovation and collaboration, organizations

should focus on the following:

• Flock to talent and culture. Organizations need to situate innovation-minded teams in a loca-

tion whose culture and talent base is conducive to their business goals, whether that’s in a

smaller city away from headquarters or in an area of the capital city where their headquarters

resides. Either way, the movement away from the mothership can be a vital catalyst in spurring

new ideas and thought processes that are sometimes squelched by senior management teams.

• Consider the human in the worker. To truly benefit from the cross-pollination of ideas among

industries, partners and clients, workers need the ability to directly experience the cultural vibe

inside and outside the office. Locations that allow for a mix of leisure and work activities inspire

opportunities for chance encounters and positive friction. Also, areas that combine these ele-

ments are more attractive for workers to mingle, even after office hours.

• Make movement a priority. Organizations need to focus on areas that allow for fluid movement,

especially when colocating multiple offices in a single city. In addition to easy access to transpor-

tation, this also means paying attention to where workers, clients and partners in the local area

could collaborate outside the office. “Linking areas” should be scoped out, with multiple loca-

tions available for effortless meetups, including café’s, restaurants and coworking spaces.

• Follow the open data. In our workspace study, 43% of business leaders are looking to move to

cities with a compelling smart city vision. By opening their data and allowing for the creativity

borne of the private sector, smart cities can operate as catalysts for productivity, efficiency and

quality of life for workers.

A Final WordThe benefits of fine-tuning an organization’s location strategy go beyond increased productivity

and efficiency or anecdotal reports on inter-company/inter-industry collaboration. When properly

constructed, these ecosystems can become epicenters of game-changing innovation and creativity

that will spur start-ups and established businesses alike to succeed in the digital era. Digital titans

such as Google realize this and in many ways are assisting in the development of these ecosystems

by setting up a presence in these areas, which then has the effect of attracting start-ups and estab-

lished organizations alike.

Cities are becoming synonymous with digital innovation hubs, providing access to talent and ideas.

As a result, the space in which we work matters more than ever.

For more on this topic and other points of view, visit us at Cognizant’s Center for the Future of Work.

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Footnotes1 “The World’s Cities in 2016,” United Nations, 2016, http://www.un.org/en/development/desa/population/publications/pdf/

urbanization/the_worlds_cities_in_2016_data_booklet.pdf.

2 Klaus Schwab, The Fourth Industrial Revoluion, Crown Publishing, 2017, https://www.weforum.org/about/the-fourth-indus-

trial-revolution-by-klaus-schwab.

3 John Boitnott, “Why Businesses Are Moving to this Valley Instead (Hint: It’s Not Silicon),” Inc., June 8, 2017, https://www.

inc.com/john-boitnott/bwhy-businesses-are-moving-to-this-valley-instead-hint-its-not-silicon/b.html.

4 “Bristol and Bath,” Technation, https://technation.techcityuk.com/cluster/bristol-and-bath/.

5 Tech Hub website, https://madrid.techhub.com/.

6 Amir Bozorgzadeh, “Portugal Is Building a Startup Mega Campus in Lisbon,” Venture Beat, Sept. 9, 2017, https://venture-

beat.com/2017/09/09/portugal-is-building-a-startup-mega-campus-in-lisbon/.

7 “People, Not Just Machines, Will Power Digital Innovation,” Cognizant Technology Solutions, 2016, https://www.cognizant.

com/whitepapers/People-Not-Just-Machines-Will-Power-Digital-Innovation-codex1850.pdf.

8 Caroline Baldwin, “HMRC’s Digital Delivery Centre in Newcastle Opens for Business,” ComputerWeekly, Aug. 1, 2014, https://

www.computerweekly.com/news/2240226038/HMRCs-Digital-Delivery-Centre-in-Newcastle-opens-for-business.

9 “Space Matters: Shaping the Workplace to Get the Right Work Done,” Cognizant Technology Solutions, 2017, https://www.

cognizant.com/whitepapers/space-matters-shaping-the-workplace-to-get-the-right-work-done-codex3264.pdf.

10 Kristian Wasen, Innovation Management in Robot Society, Routledge, March 12, 2015, https://books.google.co.uk/

books?id=ic8qBwAAQBAJ&pg=PT203&lpg=PT203&dq=positive+friction,+innovation&source=bl&ots=pkA2ysBB-

mT&sig=ApToFN6ooB5OIFVyD_jdZQ2lnsY&hl=en&sa=X&ved=0ahUKEwi3ifOM27TaAhXlC8AKHa3dB6MQ6AEIOjAC#v=one-

page&q=positive%20friction%2C%20innovation&f=false.

11 Oliver Wainwright, “Google’s New UK Headquarters Aims to Make Going to Work Exciting,” The Guardian, Nov. 1, 2013,

https://www.theguardian.com/technology/2013/nov/01/google-new-london-headquarters.

12 Alex Konrad, “WeWork Confirms Massive $4.4 Billion Investment from Softbank and Its Vision Fund,” Forbes, Aug. 24, 2017,

https://www.forbes.com/sites/alexkonrad/2017/08/24/wework-confirms-massive-4-4-billion-investment-from-softbank-

and-its-vision-fund/#2ccc34e15b3c.

13 Marta Bausells, “Superblocks to the Rescue: Barcelona’s Plan to Give Streets Back to Residents,” The Guardian, May 17,

2016, https://www.theguardian.com/cities/2016/may/17/superblocks-rescue-barcelona-spain-plan-give-streets-back-resi-

dents.

14 Wikipedia entry for Hamburg Olympics referendum, 2015, https://en.wikipedia.org/wiki/Hamburg_Olympics_referen-

dum,_2015.

15 TransformCity website: https://www.transformcity.com/.

16 “Can the Mayor’s New Plan Deliver Good Growth?” London Assembly, March 9, 2018, https://www.london.gov.uk/press-re-

leases/assembly/can-the-mayors-new-plan-deliver-good-growth.

17 “Valuable City Data for Anyone,” Helsinki Smart Region, https://www.helsinkismart.fi/portfolio-items/open-data/.

18 “Tampere, Finland, Aims for Top Smart Mobility Testing Platform in Europe,” City of Tampere, Nov. 8, 2017, https://www.

tampere.fi/en/city-of-tampere/info/current-issues/2017/11/08112017_2.html.

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About the Author

Acknowledgments

The Cognizant Center for the Future of Work would like to thank Oxford Economics for its research assistance and the following experts for their time in interviewing for this study:

• JarmoEskelinen,ChiefInnovationandTechnologyOfficer,FutureCitiesCatapult

• Eliot Postma, Architect, Heatherwick Studio

• David Gann, ex-Chairman, Smart London Board

• Kees Christiaansee, Founder, KCAP

• Mike McNicholas, Managing Director, Atkins

Michael Cook Senior Manager, Cognizant’s Center for the Future of Work, EMEA

Michael M. Cook is a Senior Manager in Cognizant’s Center for the Future of Work in EMEA. In this role, Mike identifies the changing dynamics that will shape the business ecosystem of the future, and delivers original research and analysis of work trends in Europe. Mike also collaborates with a wide range of technology thinkers and academics about what the future of work will look like as digital changes many aspects of our working lives. Mike is an established speaker with broad expe-rience across the services market, including customer expe-rience management, buy-side advisory, talent and workforce solutions, and cybersecurity.

Prior to joining Cognizant, Mike served as Global Research Director with HfS Research, where he worked across multi-ple research topics and led HfS’s buy-side focused research program.

Michael can be reached at Michael.Cook@cognizant.com

Twitter: https://twitter.com/MikeMarkC

LinkedIn: https://www.linkedin.com/in/mike-cook-85550755/

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ABOUT THE CENTER FOR THE FUTURE OF WORK

Cognizant’s Center for the Future of WorkTM is chartered to examine how work is changing, and will change, in response to the emergence of new technologies, new business practices and new workers. The Center provides original research and analysis of work trends and dynamics, and collaborates with a wide range of business, technology and academic thinkers about what the future of work will look like as technology changes so many aspects of our working lives. For more information, visit Cognizant.com/futureofwork, or contact Ben Pring, Cognizant VP and Managing Director of the Center for the Future of Work, at Benjamin.Pring@cognizant.com.

© Copyright 2018, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein is subject to change without notice. All other trademarks mentioned herein are the property of their respective owners.

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