Today, maybe more than ever, digitalization plays a crucial role in our everyday life. It affects us on both a small scale e.g. for our mobile internet connection, and on a larger scale e.g. cities and their future development. There are different approaches to dealing with the role of digitalization in cities. One famous approach, the „smart city“ concept, attaches great importance to digitalization for the future development of cities.
But if digitalization or digital technologies are supposed to change a city and to contribute to its citizens‘ wellbeing, how should they be best applied? Which understanding of digitalization should this interdependency be based on? How can technology be used to create needs-based solutions?
The three stages of digitalization – cities edition
To approach an understanding of digitalization that explains in-depth how it can affect cities and their citizens, we use our framework of the „three stages of digitalization.“ We previously introduced this framework by comparing different companies and how they use digitalization to change their products and eventually transform entire industries. In the city context, we want to show how the framework functions from a city’s perspective, and consequently examine how cities need to understand digitalization and digital tools to become future-proof and to change themselves for their citizens‘ sake.
For a better understanding, we work with examples for each stage, referring to projects or developments evolving in the mobility sector of Berlin. Our understanding of „the city“ in this context does not only involve the city’s administration. „The city“ also implies public or semi-public businesses or companies. One famous example in the mobility sector of Berlin is the Berlin transport company BVG.
The first stage of digitalization in our framework is called „digitization“ and means the simple change from an analog product or service into a digital one.
In a city context, measures on this first level of digitalization could, for example, be the digitization of former analog processes or services. One measure of the level of digitization in Berlin is the route planning app for the Berlin transport company BVG. The BVG online route planning service had probably already existed for quite some time via the website when the app launched in July 2014, but this made the timetables of public transport much more accessible to mobile users. Users could now easily look up a suitable connection to get from A to B. The previous analog process of looking for a connection with public transport in a printed timetable was now fully digitized.
Where the BVG route planning app reached its limits, the second stage of digitalization emerged. The second stage of digitalization is called „optimization.“ Optimization means the generation, connection, and analysis of data to optimize processes, services, or products.
From a city’s perspective, measures in this second stage can be projects or initiatives improving existing services, products or processes based on data generation, connection, and analysis. An example of this level of optimization in Berlin is the mobility platform Jelbi from the Berlin transport company BVG. The platform, which was launched in Sommer 2019, offers a choice between different local micro-mobility services like e-scooter companies, ridesharing services, or public transport. Users get an overview of potential mobility solutions near them in one app instead of having to check multiple apps to decide on a service.
The third stage of digitalization is the stage of „transformation,“ and describes the needs-based creation of products, services or business models. While digitalization is used in the first two stages to change an existing product or service by digitizing or optimizing it, this third stage opens up new products, services or business models. An example of this third stage in Berlin is the mobility service „Berlkönig„, launched in September 2018. Berlkönig is a service that was also invented by the Berlin transport company BVG. Berlkönig works like a shared taxi or shuttle service and is based on an app. Users can find a ride near them and share it with other people who have a similar route. The route and suitable stops are calculated by an algorithm. The Berlkönig‘s service and business model differ from the Jelbi example for several reasons: first, it is a new business model that was created based on the need for an affordable and comfortable transportation service in between public transport and taxis. Second, it goes beyond the connection of existing services and processes, and therefore enters the stage of transformation. Still, it is a service whose future existence remains unclear. Since it’s not profitable, the BVG would need public money to continue the shuttle-service.
All in all, the differentiation above should help to not only categorize existing projects but also to create an understanding of what is needed to solve city problems.
Even if transformation projects might have the biggest impact or effect, they might not always be the best solution for a city’s challenges. It is often a mix of projects from different stages of digitalization that meet the citizens‘ needs best, as the processes in most cities are yet not agile enough to steer all projects toward the third stage of digitalization. Long and complex processes make it hard to face fast decisions and to come up with new business models. Consequently, and especially for cities, digitalization is not an end in itself. Digitalization or digital technologies should always be applied on different stages to serve a specific reason, to solve the citizens‘ needs.