Dear Students,
Today we learned about exponential technologies and that future business models will need to built with anticipated technologies in mind vs today’s technologies. Please discuss how some of these technologies discussed in class could reduce costs and increase revenues for your cities. Please be specific. Go over your city’s balance sheet and income statement and suggest which expenses could be reduced and which revenues could be enhanced? Make appointments with me as a group to start discussing your ideas and strategies. I am available MW after 5:30pm – 10:30pm in my office. Soni will put up a Google sign-up sheets to schedule our meetings.
From the lecture, the most important lesson that I learned was that there is no way to tell what the future will hold and how fast it will come. For example, someone was noted saying that the “Telephone has too many shortcoming to be …. A means of communication”. However, it is known that the telephone not only became of the main means of communication for its time, but it also led a global shift in innovation to the cell phone, to texting, and beyond. This type of growth is what Professor Darwin says is “exponential” growth. This is because the technology in itself led a rapidly growing market and caused other technologies to grow because of it.
The first technology I can see being utilized in Oakland is the pill human on a chip. This technology is essentially allowing for every medicine to be tailored exactly to its consumer. So, for instance, if a patient needed to have steroid medicine, the doctor would plan a schedule of four different transitional periods for the patient to test out which medicine worked best for him or her. However, it is rather expensive and requires an excess amount of visits to the pharmaceutical business, a level of experimentation of the customer to be willing to try so many medicines, and the consumer would have to have the funds to try out and buy so many different medicines. With this new technology, it will make it so that the consumer only has to try one pill, one that is specifically tailored to cure and treat a particular patient. This is open innovation at its finest.
Specifically with Oakland, the city spends 18,593 thousand dollars annually on “Aging & Health and Human Services”(taken from the Income Statement). To put this in perspective, Oakland (one of the most police-dense cities in the country) only spends 12,623 thousand dollars on Police Services. In comparison, Oakland utilizes a whopping $6 million less on police services than on healthcare. With this new pill human technology, Oakland’s high expenses on healthcare could decrease significantly because Obamacare would not have pay as much for patients to keep trying new medicines, if people were cured faster, there would be less patients at hospitals, and because there would be less pharmaceutical companies that dominate the market with high prices. The city’s money that would be saved from the human pill could be reallocated to other services, such as decreasing taxes for businesses so that they have more funds to innovate and risk their money for new innovations, such as the pill human, which demonetize the market.
The other technology that Oakland could utilize to save costs is the cloud-nano software that is estimated to be fully developed in 2032. It is supposed to infinitely compute memory and intelligence. This service could specifically be used to decrease library costs which is close to $13.5 million a year (taken from the Income Statement). For instance, instead of buying all of the books for the libraries, delivering the books from one library to another, and paying librarians to shelf all of the books, every book could potentially be on the cloud-nano software for readers to use. This would significantly decrease the costs that Oakland has for its library. The type of innovation that the cloud-nano software could provide is dematerialization. With a smaller amount of physical books present in public libraries, there would be less need for large buildings that are expensive to pay rent for and expensive to maintain structurally.
Future technologies such a sensors, energy efficient retrofits, renewable energy generation, energy storage devices, electric vehicles, high-speed public transportation networks, and many other technologies are within a very near reach of being implemented within our existing society.
When working on a smart city project, it is imperative to keep these technologies and their rate of commercialization in mind. As Professor Darwin mentioned in class, there adoption of technology follows an S curve. There are some early adopters, and then there is a surge of commercialization, followed by a leveling out of the remaining few customers.
Currently, the iphone is a great representation of a smart technology that is in its heavy commercialization stage. I recently just read an article on the NY Times on Apple’s rise to the top (http://www.nytimes.com/2015/01/30/business/how-and-why-apple-overtook-microsoft.html?_r=0). Iphone sales are at a record high, with more than 34,000 iPhones sold every hour, 24 hours a day, during the last quarter. This vast distribution of smart phones globally all on one ubiquitous network represents a huge opportunity for collaboration and communication on a digital platform.
Now it is true that just as fast a technology or product can rise, it can also fall. Therefore, it is interesting to point out that one of Apple’s core objectives is that innovation should be maintained throughout the business process, even if it means destroying ones own product. One of Steve Jobs’ best quotes was “If we don’t cannibalize ourselves, someone else will.” This dedication to innovation is what has kept Apple at the top.
In terms of Smart Cities, this sheds a new perspective. We need to make sure our frameworks and smart city systems are flexible enough to adopt new changes and evolve rapidly. This may mean weakening the bureaucratic processes through public private contracts and partnerships. I am also interested in other ways we can accomplish this and will be sure to research it further in the next few days.
Today, we started class with a thirty minute working session in which we had the opportunity to share our progress with Professor Darwin. Professor Darwin provided us feedback and engaged us in dialogue about creating a replicable smart city model. Our dialogue transitioned into a lecture on exponential technologies in business and the market place. Implementing such technologies in San Francisco, could lead to real cost savings and revenue generation.
According to its balance sheet and income statement, San Francisco allocates a significant portion of its budget to roads and public transportation. Two key disruptive, exponential technologies San Francisco can incorporate are 3-D printers and IoT sensor technology. 3-D printers provide the opportunity to quickly make sub-road fixes and maintain and replace key transportation infrastructure. The same can be applied to bus and train parts in aging MUNI, BART, and other public transportation systems. Moreover, anticipating growing IoT sensor technology and capacity into MUNI, for example, will allow for more efficient public transportation ridership. Specifically, ridership patterns can be better tracked, bus break-downs can be anticipated, and downtime and delays will be reduced. The net effect of incorporating both 3-D printing and IoT sensor technology is reduction in cost and increase in revenue. In the long run, this will generate additional capital to exponentially grow the implementation of such technology across the city.
To be effective, disruptive technological advances must reduce overall cloud computing and data analysis costs. From discussions with executives in various multinational corporations, I found that organizations (and cities) have an abundance of information and data. The real issue, however, is finding the internal capacity and technology to best analyze and make use of the data. Understanding our data makes room for a powerful opportunity – well-formulated, data-driven decisions.
It is important, however, for city governance to balance incorporation of exponential technologies and cost reduction with the more important goals of regard for overall public good. For example, San Francisco spends significantly on public safety. Today, we learned wearable technology that integrates with one’s body – such as a contact lens form of Google Glass. Based off this, I came up with an interesting yet incredibly scary idea. If everyone was wearing these lenses, the city could record and simultaneously analyze what everyone is seeing. Then, in the event of a crime or traffic accident, law enforcement would automatically be notified. Even more, the analytics could piece together footage from multiple individual’s lenses to recreate a crime scene or scene of a traffic accident. Once R&D and system implementation costs are completed, sustaining the program would be relatively cheap and would save the city a significant amount of money. However, implementing such a program raises issues and privacy, commoditizing the human body, and other political and social issues. In this sense, the goals of technology enterprises and city governments should diverge.
Ultimately, through effective public-private-partnerships and a commitment to balance, exponential technologies can provide cities a platform to save money and simultaneously maximize the quality of life for its residents. In the context of smart cities, disruptive and exponential technologies will ultimately lead to more effective and efficient resource allocation, management, and planning.
After brief meetings with each team to gauge progress and address concerns in today’s class, Professor Darwin dove in to some grand challenges that contribute to smart cities and societal improvements as a whole. Through advancing technologies and societal changes, such as dematerialization and demonetization, we are now better able to promote more efficient means. Dematerialization in particular could help the city of San Francisco reduce some of their equipment costs and storage space allocations, as well as encourage citizens of the city to do the same. This would thus increase the overall space available to gain more revenue through additional projects such as parks or housing complexes. In addition, the power of development, computing, and artificial intelligence will change the way we approach problems and developments of a smart city infrastructure.
While these trends are still futuristic and may seem out of reach for where we are today, by taking the view of exponential rather than linear thinking, we are able to capture even more value and make grand steps toward these innovations. If we look at the history of technology over time, we can see that recent exponential thought has led to innovations such that we have been able to grow our overall wealth in an extreme way in recent decades. By thinking linearly like those who expected the end of innovation or unnecessary nature of the computer, we will be hindering our ability to fully understand what the opportunities are.
In our current age that represents an end of linear thinking, it is important to anticipate what may be possible in the future while taking advantage of what is available now. In gauging the complexity of sensor technologies (which are coming down in cost), we need to adopt a mindset that allows us to think outside the box to create the most useful and efficient solution to some of San Francisco’s greatest issues. When we think of the progressions of technologies over time such as the camera, accelerometer, and others, we can see how far they have come in terms of speed, size, and power to become more accessible and useful to the masses. Other new and innovative technologies, such as “human on a chip,” show that this shift toward exponential thinking is already occurring, and we should harness some of these thoughts and technologies to move as much value as possible to San Francisco. One way in particular that this could occur is by helping the city reduce its transportation costs through more energy efficient vehicles, as well as costs incurred from maintaining public goods such as parks, sewage facilities and infrastructure, and power supply. With automated maintenance services and sensors that would better help the city allocate its labor resources, San Francisco could reduce its overall labor costs and channel these funds into revenue-generating projects.
Today, Professor Darwin touched upon the topic of disruptive technologies and innovations. With the unrelenting advent of new technologies unfolding on many fronts, it is critical for businesses and policy leaders to recognize which technologies will matter to them, altering the way people will live and work and the overall status quo, and adapt accordingly to accommodate for such changes.
These groundbreaking, industry-shaking technologies have shaped society and the operations that take place. For instance, the telecommunications industry was disrupted by the cell phone and further displaced by smart phones. Additionally, social networks have had a huge role in altering the ways in which we communicate and relay information—namely, social networking has shifted a lot of communication from “traditional” channels such as telephone and television news to platforms such as Facebook and Twitter.
A report from the McKinsey Global Institute estimates the potential economic impact that the “next big things” in disruptive technologies could have to be between $14 trillion and $33 trillion by the year 2025. The estimated impact takes into consideration the value to be added in a variety of ways ranging from lower prices, a greener and cleaner environment, better health, and the like.
Implementing such technologies into a city like Berkeley could have serious impacts. For starters, the Marina is a major capital project that requires $13.2 million over the next five years for infrastructure improvements and upkeep. The coastal nature of the Marina corrodes surfaces from the salty air and requires continuous maintenance and repaving. Advanced materials could be a possible solution to the corrosion since smart materials that self-heal or self-clean are being tested and pumped out. Memory metals, for instance, can revert to their original shapes if altered or damaged. Such a technology presents a cost-efficient way to maintain parts of a city.
While the City of San Jose is a considerably well-established city, the city faces the greater issue of leveraging its resources in the most efficient and effective manner to enhance the quality of life for its residents. It has essentially provided the basic needs for its residents, so how can it further improve on this process, in light of the rise of anticipated technologies? The government has acknowledged anticipated technologies and is still slowly finding optimal smart city solutions that can seamlessly integrate with the city to reduce costs and increase revenues, but there are some primary observations I have noted which could help reduce costs on the balance sheet. Currently, San Jose uses 12.2 billion kilowatt hours of energy each year. One of their long-term cost reduction goals is to cut down consumption by half by the year 2022. Greater investment and strategic implementation of sensor technology would be a perfect complement to this goal, as it can promote the usage of smart energy and individually adjust energy usage settings based on each household’s personal preferences. Thus, there will be multiple cost savings such as 40% energy savings and 15% savings on new construction.
With regards to this topic of sensor technology, one particular technological device that comes to mind is Google Nest, which essentially manufactures programmable thermostats and smoke detectors for homes. With the installation of Nest in homes, it picks up on each individual’s thermostat preferences within the household, and will adjust it accordingly to the people around. When the person leaves, it reduces the temperature within the household (cuts down on constant heater use) to conserve energy until the next person returns. While this is only specifically geared towards thermostat and smoke detection for now, Nest will be programmable with other household devices (like fridges, television, lighting, and more) in the future. This ties in to anticipated technologies and the shift towards the Internet of Everything, in which everything is connected online.
Besides that, a primary cost issue that San Jose has been facing is the skyrocketing pension costs due to retirement. These benefits are extremely expensive costs towards the government. For example, San Jose’s total retirement costs increased by over $200 million per year in the last decade, and are still increasing. Furthermore, these payments are cutting into the employment of city services like officers, librarians, and firefighters due to the decrease in allocated budget to these respective departments. Anticipated technologies could possibly counter this rise in unproductivity through on-demand workforce and outsourcing to crowdsourcing. It is crucial for people to start thinking in an exponential manner, by embracing the ability to micro-work from home and specifically joining work platforms that directly support their skills and abilities. By giving people the freedom to work as they please, this serves as encouragement to continue working in their own way and reduces the desire for a quick retirement solution. By adopting a flexible approach as the government evaluates San Jose’s business model based on today’s present age, its preparation of anticipated technologies will enable the city to shift in a seamless manner.
The use of “human on a chip” can revolutionize preventative medicine. The patient takes a pill filled with tiny sensors that spread through the body. Stationed at every organ, these sensors can monitor different indicators of health and warn the patient of any red flags, such as the development of cancerous cells or a deficiency in a specific vitamin. As a result, the patient can immediately talk to his doctor to prescribe the right preventative measure before any significant decline in his health, which will save even more money on treatments in the long run. This will save the public health system a lot of money and improve the overall well-being of San Jose. In order to realize the full benefits that this technology can provide, we need to restructure our “fee-for-service” business model of funding healthcare as well to favor prevention over treatment. Even with the use of this technology, the poor may fail to act on the sensors’ warnings because they think they can’t afford a visit to the doctor, when in reality, they can’t afford not to because treatments down the road would be far more expensive. As Professor Darwin taught us in a previous lecture, technology that creates value goes hand in hand with an appropriate business model that captures the value.
With the widespread availability and affordability of sensor technology, cities have many opportunities to reduce costs while addressing resident pain points. One major pain point within San Jose remains public safety, and the city has responded to citizen outcries through devoting 32% and 17% of its General Fund to the police department and fire department, respectively. When San Jose first began to devote significant attention and resources to its police departments, crime dropped drastically and the city became one of the safest cities of its size; however, surveys still reveal citizens’ dissatisfaction with the level of safety in the city. Although one option would be to devote an even higher percentage of the General Fund to the department and to expand the police force, this may not be the most cost-efficient or effective solution. Rather, San Jose could invest in smart sensor technology that allows the police department to remotely monitor the streets 24/7, gather valuable data on city crime, and respond to suspicious activity before crimes even occur. This investment would allow San Jose to reduce the costs associated with its police department and reallocate funds to other departments, and it would also result in increased revenue (i.e. tickets and fines) to help the police department increase its self-sustainability.
San Jose can also use sensor technology to better gather data on some of its pilot programs such as bike and car sharing. In Palo Alto, bikes are being equipped with sensor kits that gather information such as routes traveled, acceleration, and wheel speed to identify how the city can better accommodate bikers. San Jose currently allocates just 3% of its General Fund to transportation, but even a 1% decrease would save millions of dollars that could be devoted to other departments. Also, this data can help the city reduce congestion, improve public health, and increase overall well being by reducing citizens’ dependency on cars. The sensor technology would require a relatively small upfront investment, and it would result in increased revenue by increasing the usage of the city’s bike and car sharing programs. Overall, sensor technology can be implemented in many creative ways to help the city gather large amounts of data and draw insights that are otherwise unobservable.
“As any technology becomes an information technology, it starts advancing exponentially” — Ray Kurzweil
The topic of today’s conversation was the concept of exponential innovation. As noted by Ray Kurzweil, an inventor and innovation guru, technology does not progress linearly, but rather exponentially. According to Professor Darwin’s lecture, we tend to think linearly in regard to technological advancements. However, in order to capture potential value, it is imperative that we think exponentially. In doing so, we are capable of not only anticipating future technologies, but also making significant strides toward creating smarter cities.
One of the primary technologies mentioned in class is sensors. Sensor technology will undoubtedly play an integral role in the development of smart cities. In regard to Berkeley specifically, sensors could be used for lighting not just within buildings but also on the streets. According to the City of Berkeley’s 2014 Statement of Activities, the city focused heavily on improving public safety by spending over $95 million in this area. This value creation of improved safety was then translated and captured as a 44% decrease in violent crime according to data released by the Berkeley Police Department. Therefore, Berkeley is already taking steps to decrease violent crime, but these efforts could be greatly accelerated if sensors were put into street lights. Producing more energy efficient street lights would not only reduce costs, but also further decrease crime in Berkeley.
Dematerialization is another concept that would benefit Berkeley’s “smart” makeover. The importance of the iPhone in our present society is undeniable. There is no longer as great of a need for hard copies of paperwork because we can have all of this information in our pockets. Therefore, the phenomenon of dematerialization is highly relevant to our planning of smart cities as we continue to move forward into an age of exponential innovation.
Today’s lecture was on Exponential innovations. The professor used Moore’s law to demonstrate exponential growth in technological efficiency. In fact, Moore’s law is a phenomenon in computing which has improved the speed and power of programs. As a result, programmers relied on Moore’s law in lieu of producing the most efficient programs. As the speed became impacted by the laws of thermodynamics, the exponential growth faced a huge obstacle. In order to keep the growth, engineers had to create a workaround– parallel programming and dual cores so that the hardware could continue to keep up with the software.
The professor makes a good point for us as business students to always be thinking a power above the current reality. However, I would also argue that innovative workarounds through smart business models can create exponentiation beyond just advanced technologies. I also would argue that exponential growth in of itself should not be the singular goal. Exponential growth is not sustainable– ex world population, transistor speed, Snapple’s revenues circa 1997
Today’s lecture discussed the dangers of linear thinking in an exponentially growing world, and in particular, Roberto Clemente’s quote from lecture stood out to me: “Any time you have an opportunity to make a difference in this world and you don’t, then you are wasting your time on earth.” As business-minded students, we often measure the impact of (or the “difference” made by) smart technologies based on costs minimized and revenues generated. The following are a few ways through which the City of San Jose can be enhanced:
1) Problem: The public safety problems caused by high gang-related activity in urban neighborhoods create significant police management and public surveillance costs. Approximately 37% of San Jose’s current municipal budget is allocated to operating safety measures in the city.
Solution: Many companies such as Tyco have sensor technology that deters crime through video surveillance and also reduces the costs of running a large police force. As a byproduct of declining crime rates, residents may be attracted to living in certain parts of the city that are currently not generating any commercial or residential revenue.
2) Problem: Ubiquitous access to the Internet of Things is often the next goal for developed metropolitan cities. Currently, citizens need to enter a restaurant, library, or Internet café to access WiFi and connect with their online tools.
Solution: Ruckus Wireless, an Internet provider, recently signed a contract with the City of San Jose to bring fast and reliable wireless services to Downtown San Jose. They intend on supplying advanced WiFi products and services for a new outdoor WiFi network that will cover San Jose’s business district and inevitably support thousands of simultaneous users and increase in foot traffic by city visitors. In addition to revenue generated by people using different services online and visiting San Jose, the WiFi network will be able to support a myriad of new applications such as high-definition video, parketing meters and digital parking guidance signs, video surveillance, and traffic signaling that reduce public infrastructural maintenance costs and increase in alternative revenue sources through parking and the utilization of other public goods.
3) Problem: San Jose is not known to be a hub for manufacturing, and instead relies on its vast talent pool to craft technologies that are then outsourced abroad to be manufactured. However, will we begin to see this change in the next decade with increasing automation?
Solution: With the progression of robotics development, as discussed in class, it may become more optimal for technology companies in San Jose or nearby cities such as Mountain View to manufacture their tools and electronics in-house in San Jose. Not only does this create a diversified set of industries operating in San Jose, which is always positive in ensuring that a city survives in spite of a collapse of one industry, businesses save money through automation and San Jose generates more revenue through its large amount of unused land and infrastructure to build factories and lease space.
The San Jose Mayor Chuck Reed stated in 2012 that “as the world’s leading technology center, we strive to connect those who live, work, and visit San Jose with the latest and most advanced technologies that Silicon Valley has to offer. We see the Smart WiFi network as more than simply an infrastructure, but as an economic platform to attract businesses and entrepreneurs that want outdoor Internet access with the same speeds, capacity, and reliability that they enjoy indoors.” While #1 indicates a solution to an existing problem and #3 may be a solution to react to changing industry dynamics, #2 (access to the Internet of Things) will be the primary source of value creation by San Jose to its city residents. In the process of creating value, San Jose will also be able to capture this value through revenue generation by traffic from new businesses, entrepreneurs, and city residents. Ultimately, we hope that San Jose will not be on the backburner of Silicon Valley’s radar.
Today, we had a very productive lecture. Professor Darwin began his presentation with an explanation on exponential technologies and their impacts on our society. It seems as if in the past couple of years, technology has progressed at unprecedented rates. As a society, we have seen several trends that have taken form particularly in the 21st century. One major trend we can all attest to is the dematerialization of products. In other words, our products have gotten smaller and more compact. We have created multifunction devices such as the iPhone that can not only make phone calls, text, but also play music, show movies and much more. Another major trend is the demonetization of products. With technologies such as cloud computing and the Internet, many products are now more accessible than ever, and often times even free. For example, bookstores are not nearly as common as they were even ten years ago. Local stores have been slowly replaced by online platforms such as eBay. These trends will inevitably have consequences on societal lifestyles and economic activities in times to come.
In the last part of the lecture, Professor Darwin introduced us to a series of new technologies currently being developed. Although the final products may not be available to the public for years, when they do become available, they have potential to improve lives and change the way we do things. In the future, many of these technologies available can also be used in the development of smart city infrastructure. More specifically, they have the ability to help cities either increase their revenue flow or cut costs all the while maintaining or improving efficiency. For San Jose, some of these technologies will be particularly useful. The first technology is the camera technology. As professor Darwin has said in class, camera technology is quickly changing. The camera is getting smaller and smaller and there are even talks to create cameras that can be integrated into the human body. In the most recent mayoral race, one major contested issue was around public safety. Although San Jose spends a significant amount of its budget on public safety (25.63%), the results have been disappointing. San Jose’s crime rate has increased over the past few years and the police force efficiency has slowed. This is due to a shrunken police force of about one-third which can be partly attributed to the increasing pension problem. Despite San Jose’s expenditures on public safety, the city is not receiving the optimal amount of value based on the resources that it has contributed. Advanced cameras with wide-range capabilities will allow for the city have a stronger surveillance program that will decrease the likelihood of crimes. Very far in the future, it is possible that humans will be able to wear camera technologies which will allow them to track activities around them. Using new camera technologies will allow for the city to keep track city activities even if the police force does not increase. This technology can help to decrease the amount of manpower needed as well as discourage people from committing crimes.
Another major issue that San Jose is currently facing is the decreasing amount of public services delivered forth by the city. From Fiscal Year 2013 to Fiscal Year 2014, the amount that the government spent on community services decreased $7Million. One effect this has had is made public resources such as libraries less readily available for its residents. Libraries instead of being opened six days a week are now opened four times a week due to high labor costs and maintenance fees. One way that technology can address this problem is through cloud storage. In the past few years, cloud technology has been utilized more heavily. What San Jose can do is allow resources from libraries to put in the cloud. These resources can, as a result, be made more available to its residents. Rather than having to go to the library, residents of San Jose will have access to resources in the comfort of their own home. This will help San Jose cut costs because rather than keeping opened a large number of libraries, some of the libraries can close down because information can be found there.
Technology has endless potential to help cities improve their infrastructure and services. It is important to note that there are dangers and unpredictable consequences that come from these technologies. That is why it is important for cities to wisely choose the type of technologies they want to integrate. In the future, if these technologies become available, they have potential to improve the quality of life for many people and generations to come.
The overall theme of lecture is using technology to disrupt old business models – and in our case, leveraging technology to help relieve the pain points of cities. First, looking at Oakland’s income statement a majority of the expenses goes to public safety ($379.8 million) and then the second highest category is to community services ($116.9 million). From the figure below, the expenses are so high but revenue is insignificant. This needs to be changed – public safety is a big concern as Forbes magazine reports Oakland to be the 3rd most dangerous city in the U.S with a crime rate of 1,683 per 100,000 residents.* Instead of pouring more money into building academies or paying police officers (higher salaries do not necessary equal higher quality in service), perhaps we can try to break down the problem a bit more – and think about it in terms of current crimes and prevention methods…and then use some of the current disruptive technology to try to come up with some innovative solutions. So I think it might be beneficial to use some of the “Lean Start Up” principles which is a concept coined by Eric Ries – in which we can essentially test our assumptions and hypothesis by coming up with the most minimally viable solution – run it as an experiment through the scientific method and then collect data to gain insight, then use the feedback to improve your solution. In this way, the City of Oakland acts as a start-up to create a solution (product) to meet a need (violence and crime prevention). So I’m going to try to illustrate this through an example (based on a case study of Progresa) – consider that education is one of the key factors in crime prevention (more educated society tend to exhibit less violence). However, a study done on Oakland’s attendance rate shows that “kindergartners, as well as sophomores and juniors in high school, were the most likely to be chronically absent, with about 1 in 6 in each of those grades missing more than 18 days.”** If students miss school, they tend to fall behind in school and in turn not be able to grasp basic concepts for high school (which could lead to higher drop out rates). So what we need to do is find out what the opportunity cost of going to school is and try to eliminate it for families. This could be where the technology part comes in – in that, if it is financial or food availability, then we can provide families these types of amenities given that there students meet certain attendance goals. The key is to utilize technological systems to help facilitate and track these families and enable open communication between the program administrators and participants. And of course, the student attendance conditionality can be tied to a variety of other things as well such as providing families with asthma checks and other types of technologies.
Another issue I want to bring up is the investment projects that Oakland seems to be pursuing (found on page three of the CAFR). These projects have been long-dormant projects, which have now “sprung to life.” These projects include constructing a marine terminal; building more housing, continue to negotiate for sport facilities, and aggressively pursuing and leasing retail spaces. I think one of the key issues of the problem in general is that it has been “long-dormant.” Who has been working on it? Who is keeping everyone accountable? Although, the idea of pursuing these projects is to provide services and to get more people to invest in Oakland – however, the economics behind it seems so linear especially centering on the idea of how more manufacturing and construction will create more jobs. Or even the idea of aggressively pursuing retail projects – are other factors being considered in why small businesses will want to open up shop? I think before pursuing these big projects – it would be worthwhile to test some of these assumptions before expending so much money and energy. For instance, perhaps the government can run local focus groups to test the demand for retail space. It would be paramount to learn about these key pieces of information, so that the city can make changes to their plan before investing in a dead-end.
*http://www.forbes.com/pictures/mlj45jggj/3-oakland/
** http://www.sfgate.com/education/article/Deep-racial-divide-in-Oakland-schools-5784072.php
Source of figure: From Page 5 of the City of Oakland, California Comphrehensive Annual Financial Report for the year ended June 30, 2014
(1) Smart Parking Meters increase revenue and profit
As credit card companies and banks are transitioning from physical methods of payment to electronic methods of payment, there is a trend of dematerialization. With the invention of smart phones and secure mobile applications, people are carrying fewer things in their pockets. One of the things people are carrying less of is a credit card. Apple’s new TouchID feature and Samsung’s NFC technology is enabling consumers to purchase goods or pay fees directly through their smartphones.
Those technologies will serve as an excellent compliment to the process of paying for public parking spaces in urban cities like San Francisco. Drivers today pay in advance with their credit cards for street parking in San Francisco. If, for some reason, they want more time, they need to come back to the parking meter and pay again with their credit cards. Such hassle restricts people from spending more time in the city or additionally paying for more time. If the city partners with mobile application companies to install digital payment features into the parking meters, then more drivers will be willing to extend the duration of their parking, thereby bringing in additional revenue to the city.
Implementing such technology will marginally increase the city’s operating expenses, but adequately increase the city’s operating revenues from parking and transportation, which will increase its operating net position.
(2) Sensor Technology reduces overhead costs and increases profits
As cities are becoming automated through the implementation of sensor technology, the potential for maintenance cost savings is increasing. Throughout the 21st century, the majority of buildings were lit by fluorescent light bulbs. When scientists invented LED light bulbs, which consumed less electricity to reach the same brightness as fluorescent bulbs, homeowners and building managers replaced their entire buildings with LED lamps. While the lamps were expensive, they would save money in the long run from consuming less electricity.
With sensor technology, building owners no longer need to buy expensive LED lamps. If they install one of those sensors in buildings, lights will automatically turn off in areas where there is no activity. LED lamps help people save money by reducing energy consumption, but sensor technology helps people save more money by reducing the duration of energy consumption.
Implementing this technology requires the city to make adequate upfront investments, but it will reduce overhead costs in the long run, increasing operating margins of the city.
Today in class, we learned about the inverse growth of technology: as the physical components (phone, tablet, etc) become smaller, they are also becoming increasingly capable of doing more than their former, larger counterparts. Additionally, when it comes to developing these technologies, developers must be thinking years in advance in order to remain competitive. Professor Darwin introduced us to the S-curve model to challenge the standard linear way of thinking. Anticipated future technology has an element of amazement that hooks the consumer, and that should be target for companies.
In terms of applying exponential technologies to San Francisco, we must first look at the primary revenue and cost drivers of the city. According to the financial statements, the main revenue drivers for San Francisco are property taxes, state funding, business taxes, and federal funding. The primary expenditures for the city are public protection, public works, and human welfare and neighborhood development. There is an opportunity here to incorporate IoT technology, especially in the public protection space. One of my hypotheses is that by incorporating more sensors and cameras to high-crime areas, the city would be better able to track certain metrics, such as the time range of the most frequent crimes, to better utilize existing resources, thereby reducing unnecessary expenses on resources at times at which they are not needed. In order to study this, we will need to better understand the current monitoring devices in place, what is done with that data, and any other pain points of the city.
In the most recent lecture on exponential technology, I really took hold of the idea that exponential innovation combined with the internet age has made innovation far more rapid and prominent than previous years. This requires companies to create a model that is constantly open and adaptable to changes in the market and continue to ride the curve shown in the Moore’s Law slide — the 5th Paradigm of Exponential Growth.
In terms of smart cities and Oakland, I believe because sensor technology is currently riding on the latter part of Moore’s law curve, sensor technology is far cheaper than it was 5 years ago, and the city of Oakland can achieve a positive return on investment. Our group identified two main problem areas for Oakland of Public Safety and Education. In terms of public safety, expanding CCTV infrastructure would create more “eyes on the street,” and a public private partnership could be employed to reduce the $200 million dollar police budget that is currently the largest expense on Oakland’s balance sheet.
And for education, tablet technology (which has recently reached the upper part of Moore’s curve as well) could allow educational institutions to reduce their administrative costs in buying and distributing hardcover text books, for the simple price of a tablet (which has now reached below $100 with tablets like the Kindle Fire). In Oakland’s school system, while funding has increased in recent years, test scores and quality of education have not increased with the increase in expenses on the balance sheet. This is because much of the money is wasted on bureaucratic administrative purposes rather than sustainable, open models of education such as tablet technology.
Below is a graphic of Oakland’s primary Inflows (Revenues) and Outflows (Expenses):
Day 14
This is because the technology in itself led a rapidly growing market and caused other technologies to grow because of it.
Bottom line is that technology needs to be implemented and utilized to disrupt old outdated business models. For the most part a disruption is needed to be made by leveraging technology to help fix the pain points of various cities. Specifically for Oakland, the highest expenses made, as shown on the income statement, goes to public safety ($379.8 million) and community services ($116.9 million). First and foremost, looking at the income statement we can clearly see the expenses are much greater than that of its revenue. With public safety being the biggest concern for Oakland, my group and I have begun breaking down the problem to its core. Instead of funding the police forces with more money, I think we should use current disruptive technologies to come up with innovative solutions by leveraging open innovation. A use case that I think would work be innovative to utilize in the City of Oakland, is implementing LG KizON wristbands that uses GPS and WiFi data to help keep track of their children via their smartphones. I think if we utilize that specific tracking technology it would make the City of Oakland a safer place. Also noting that educating the kids is something that must be disrupted in order to secure a safer and educated place.
Education retention rates are significantly low in the City of Oakland. It is a known factor that if students miss school, they tend to fall behind, which could lead to higher dropout rates. Therefore the way to solve this issue is both utilizing IoT technologies as well as solving it economically by finding out the opportunity costs of going to school. I think if we utilize technological systems to help track families issues and create communication between the educational departments and its participants.
Overall my group and I will need to make sure our frameworks for smart city systems are flexible to give the citizens their basic needs as well as adopt new changes. I am excited to move forward in the process of developing the City of Oakland.