Global Cities' AI Readiness Index

Introduction

The rise of artificial intelligence (AI), driven by breakthroughs in Deep Learning and the rise of Big Data, has the potential to disrupt nearly all facets of everyday life.  From autonomous vehicles, to robotic assembly lines, to home assistants like Alexa and Siri – an unending flow of new technology enabled by AI has become an undeniable fact.  And as soon as we grow used to one piece of it in our lives, others pop up to compete with it, only to be displaced by something that completely transforms what we’re used to.  And then the cycle begins again, with increasing velocity.

Nowhere is the impact of this disruption more evident than in the world’s cities, which not only provide an increasingly large population for technology deployment, but also represent increasingly important vigorous global competitive players:  fighting for company headquarters, for talent, for investment, and for knowledge and financial resources.  Consider:  55% of the world population lives in cities, and the United Nations forecasts that this will rise to 68% by 2050.  Cities are at the epicenter of what many are calling the Fourth Industrial Revolution’s wholesale change of the way we work and live.

As a unit of analysis, however, cities are complex, living entities, comprised of a shifting set of stakeholders with different agendas, decision rights, areas of influence and action, all guided by history, geography, and cultural norms.  To speak of “cities,” then, necessarily compresses this variety; the burden for research is not only to account for the range, but also to try to see actionable patterns in the whole.  So, our use of the term “cities” is a shorthand for those communities that comprise every city.

As part of an effort to understand the disruption brought by AI and what it means for cities, the Oliver Wyman Forum has conducted extensive global research that includes conversations with leaders in business, government, and academia, analysis of publicly available social and economic data covering 104 cities, as well as a focused survey of 10,000 city residents in twenty-one of the world’s cities.  We hope to define the parameters of city readiness and highlight the opportunities and challenges facing cities as they meet these waves of technological disruption.

This summary report highlights key findings that identify the potential vectors for success. The report focuses on four:  vision, priorities and mindset; activation; asset base; and trajectory and development. Each is analyzed in detail and then illustrated with “deep dives” using one city to highlight each vector’s potential and trajectory.

Finally, how are today’s cities performing overall?  We’ve grouped cities by size to help understand relative performance in meeting these challenges – it’s simply not helpful to compare a small city with a megacity outright.  Size, in and of itself, can affect both the challenges faced and the options in meeting those challenges.  But just as there is much for smaller cities to emulate in larger ones, so, too, there are lessons that smaller cities can provide to megacities.  Here’s a few that stand out:
 

  • No city is close to being ready for the challenges ahead. Sure, some are better prepared than others, but all cities will need to continue to make substantial improvements to fully prepare for the impacts of next-generation technology. To wit, no city is ranked among even the top 20 across all four vectors, and none appears in the top 10 across three vectors.
  • Size is good, but focus is better. Megacities may have well-scaled business communities and talent pools, but smaller cities can be just as competitive. Five of the top 10 cities have populations less than 5 million. Amsterdam and Stockholm, smaller cities steeped in history yet fully embracing of the technology age, are among the global leaders.   Cities can learn from these European stalwarts’ mix of strong visions and well-run governments as well as how they might benefit from the intangible and mobile nature of the AI economy. 
  • City governments need to get real. Oliver Wyman reviewed roughly 250 city vision and planning documents, grading them on a rubric developed using in-house expertise and field expert commentary. We found that most cities do not address major societal changes driven by AI and other technologies. They focus on smart city developments and on opportunities, mainly ignoring or downplaying risks. A global Oliver Wyman survey of 10,000 people revealed that city-dwellers have a more balanced view: They are optimistic about the impact of new technologies on their city, though they also understand the upcoming challenges. Roughly 45% of respondents, for example, anticipate job loss due   to AI or automation.

Grasping the full scope of the impact of this disruption on cities is difficult.  Preparing for it is an even greater challenge.  Some of these changes bring immense benefits from greater efficiency, productivity, and connectivity; others bring potentially more concerning challenges of inequality and loss of personal freedom.

The Oliver Wyman Forum’s goal is to start a data-informed conversation over how the key stakeholders in today’s cities can focus on near, medium, and long-term goals to prepare and adapt to the one of the defining challenges of the 21st century. 

When a broad swath of city stakeholders was asked about city readiness for tech disruption two responses stood out.  “Is this a key challenge for today’s cities?” Absolutely.  “Have they prepared adequately for it?”  Absolutely not – and indeed, many are not even sure of the right questions to ask and often conflate technical with social policy issues.  This report is offered as a place to start.