Like multinational corporations, cities evolve in such a way that if they are not managed properly, they can wind up disappearing. Finding a sustainable and efficient model for its workers – its citizens – is the key to guaranteeing the future of twenty-first century cities. Thanks to new technologies, cities will experience a real revolution in coming decades. Gildo Seisdedos, director of the urban management forum of the Instituto de Empresa (IE) business school in Madrid, offers a structural vision of this environment in his book, How to Manage the Cities of the Twenty-first Century. His book analyzes the challenges that must be confronted, and the tools that are available for corporate management. Seisdedos shared his ideas recently with Universia-Knowledge at Wharton.


Universia- Knowledge at Wharton: What do you mean by the “third urban revolution”?


Gildo Seisdedos: The “third urban revolution” is our term for the key social phenomenon of the twenty-first century — humanity’s urbanization process. In 2008, for the first time in history, more than half of the world’s population will be living in cities. This process is going to accelerate in coming decades, especially in developing countries. The challenges derived from the stunning urbanization of our planet are, without doubt, new challenges for the [survival of the] human species. Facing that, it is essential to improve the way that cities are managed.


One discouraging dynamic is that cities have lost control of their own development process, as manifested in the phenomenon of urban sprawl. However, we can use an important weapon. Little by little, technology and the enormous potential of business management skills can be put to use managing cities. From the Urban Management Forum of the Instituto de Empresa [business school in Spain], we have been able to demonstrate the enormous potential for collaboration between corporations and public administrators in several cities in Europe and Latin America. In such a case, the city benefits from the skills of business managers while the companies benefit from increased access to a large economy with its strong growth. Another example is that construction companies are now trying to develop this concept. Without always being aware of it, they are becoming urban management companies.


UKnowledge at Wharton: How can a city be sustainable? Can the resources needed for supplying a sufficient level of services grow indefinitely? Or are there limits?


G.S.: Today’s cities are clearly unsustainable. This is a serious problem because European cities are already home to 80% of the population. The Kyoto Protocol is very hard on industries but, little by little, the unresolved issue is greenhouse gas emissions derived largely from heating and transportation. Cities are responsible for 75% of all emissions of carbon dioxide. The same can be said about water and energy. Our cities generate products and ideas but they do so in a way that is tremendously inefficient in terms of sustainability. Alternatives do exist, and I am firmly convinced that the solution will come from below and move up [the hierarchy] when it comes to urban innovation.


UKnowledge at Wharton: What is the new urban model that prevails today?


G.S.: Sadly, the model that prevails today is a city of low density characterized by urban sprawl. We want to live in a rural area that is within the city but we wind up living in something that is neither a city nor the countryside. It isn’t the city because its low density impedes the critical mass necessary for social interaction, for locating businesses near each other, and for public transportation. In addition, this model is very intensive when it comes to consuming land and invading natural areas. The U.S. is the country that created this model, and its greatest example is Los Angeles. The American experience is proving the adverse effects of this model, not only on sustainability, but also on the lower efficiency associated with greater congestion as well as the insecurity that stems from the zoning process. Curiously, the U.S. is now returning to the model of the Mediterranean city; a compact city with mixed land use. Meanwhile, we [in Europe] are experiencing a fever pitch of interest in semi-detached homes. The same pendulum has occurred, for example, with the Mediterranean diet and fast food.


UKnowledge at Wharton: What are the first steps that large cities have to take in order to change their management model?


G.S.: In the first place, they need to be aware that there isn’t any place under the sun specifically reserved for them. Globalization has done away with the rigid system of urban hierarchies we had two decades ago. Today, cities feverishly compete with one another to attract talented citizens, visitors and investments. You can’t expect higher levels of governmental authority (the region and the central government) to do this work for you. Today, cities themselves are largely responsible for managing their own development, for good or for bad. More and more, this trend is the best thermometer of their managerial skills.


Second, and this is why we do this work in a business school like the Instituto de Empresa, cities collaborate whole-heartedly with the private sector. The principal assets of cities are its people. Companies based in a city are partners who are already interested a great deal in making their city more competitive. The good news is that this competitiveness is more and more tied to quality of life and a sense of community. The key is to explore synergies and abandon suspicions.


Finally, cities have to equip themselves with tools of modern management. At the Instituto de Empresa, we have successfully adapted the Balanced Score Card, a methodology for jointly measuring the performance of operations in which the financial measures are only one element in the whole. Another key is to bring “lean thinking” (a strong belief in maintaining proper output levels) to the urban world.


UKnowledge at Wharton: Are there any examples of such a twenty-first century city in Spain or Latin America?


G.S.: The interesting thing about this “third revolution” – and the urban world in general – is that innovation can take place anywhere. There are 191 countries in the U.N. but when it comes to cities, there are thousands. And they are all different.


Beyond that, the ideal city, like the ideal man or woman, is often an amalgam of characteristics and best practices found in various cities when it comes to the key aspects of urban management. Despite its obvious limitations, I love the example of Singapore. Curitiba [Brazil] also stands out because of the way it manages transportation and the environment. I also admire the urban transformation of Valencia and the economic dynamism of Madrid. However, the ideal city is a chimera – the mythological monster that is a mix of dragon, lion and scorpion.


UKnowledge at Wharton: What role can new technologies play in this new system of management?


G.S.: Fundamentally speaking, we are already seeing a new revolution in technology, a process that brings changes in the way of thinking and ultimately in cities themselves. If the industrial revolution broke down the walls of medieval cities, technologies will do away with a model in which workers leave their homes to commute to work by car on crowded highways. We are evolving toward a model where work goes to the home via the information highway; toward a new production model based on networks that will force cities not only to compete with one another but also to cooperate with one another. We are already seeing this in such zones as Centrope (the cross-border region of Austria, the Czech Republic, Hungary and Slovakia) and Oresund (the cities of Copenhagen in Denmark and Malmo in Sweden), which move beyond the limits of the nation-state in search of inter-urban cooperation.


UKnowledge at Wharton: What relationship will be established between the city of the 21st century and the nation-state? Will the city will be more autonomous or more dependent?


G.S.: Without doubt, the trend is moving toward greater autonomy, to the point where you can talk about a new urban age; of the arrival of a new Middle Ages … a crisis of the classic nation-states, which are too small to tackle the big problems and too big to tackle other problems such as employment, housing, security and health. This is the principle of subordinated authority in Europe.


Nowadays, cities are the main engines of national economic development. Buenos Aires contributes 60% of the Argentine economy, for example. In this environment, those governments that want to prosper must pamper their cities and “urbanize” their national policies. We are already seeing this trend in many countries.


UKnowledge at Wharton: If the traditional model is obsolete, how much transition time should we expect before there are significant changes? And in what parts of the globe will this revolution begin?


G.S.: I am optimistic because I believe that we are experts in making a virtue out of reality … and this new model of the city is a necessity. The exciting thing about the world of cities is that it varies so much. Each city, like each person, is different, unique and special. And this urban diversity is a constant element in the innovation process. We are increasingly aware that the most important things are closest to us. Beyond the big political topics, the major day-to-day questions are urban questions. That is the key factor in the impressive growth of interest in cities in recent years, and it will continue to be so.