Steps Towards Developing a Smart City: Frameworks and Value Creators

Building a smart city requires more than just visionary ideas-it demands structured frameworks, strategic funding, and a diverse ecosystem of stakeholders working together. From competitive selection processes that foster innovation to layered architectures that enable continuous development, the journey toward urban smartness involves multiple interconnected elements. Understanding these foundational steps helps policymakers, planners, and citizens navigate the complex transformation from traditional urban spaces to intelligent, responsive cities.

Competitive funding: the challenge-based approach to smart city selection 🔗

One of the most significant shifts in urban development policy is the adoption of competition-based models for selecting and funding smart city projects. India’s Smart Cities Mission, launched in 2015, pioneered this approach by using a “City Challenge” method instead of traditional allocation-based funding. This approach embodies the spirit of cooperative and competitive federalism, where cities actively compete for resources based on the quality of their proposals.

The selection typically occurs in multiple stages. In the first stage, state governments shortlist potential cities based on predetermined criteria such as existing service levels, institutional capacity, and urban population size. Cities that meet these conditions then move to the second stage, where they prepare comprehensive Smart City Proposals (SCPs) that undergo rigorous evaluation by national and international experts.

The role of states and urban local bodies 🔗

State governments and Urban Local Bodies (ULBs) play a critical supportive role in this competitive framework. They contribute matching funds-typically a 50:50 funding pattern between central and state governments-and provide the institutional backing necessary for project implementation. This shared responsibility ensures that selected cities have both the financial resources and governance structures needed to execute their smart city visions.

The competitive model encourages innovation by rewarding cities that demonstrate credibility in implementation, propose transformative projects with measurable impacts, and incorporate extensive citizen consultations. Cities that don’t succeed in initial rounds receive guidance to improve their proposals for subsequent competitions, creating a continuous improvement cycle.

Understanding development models: retrofitting, redevelopment, and greenfield 🔗

Smart city development isn’t one-size-fits-all. Three strategic development models form the backbone of area-based smart city initiatives: city improvement through retrofitting, city renewal through redevelopment, and city extension through greenfield development. Each approach addresses different urban contexts and challenges.

Retrofitting existing areas 🔗

Retrofitting involves introducing smart planning in existing built-up areas, typically covering more than 500 acres, to make them more efficient and livable. Since existing structures remain largely intact, this model focuses on implementing intensive infrastructure service improvements and deploying smart applications. Cities work with residents to identify areas and develop strategies based on current infrastructure conditions and community aspirations.

The retrofitting approach offers benefits including shorter implementation timeframes and easier replication across other areas. It’s particularly suitable for historic districts or established neighborhoods where complete reconstruction isn’t feasible or desirable.

Redevelopment for transformation 🔗

Redevelopment takes a more comprehensive approach by replacing existing built environments with entirely new layouts featuring improved infrastructure. This model typically targets areas of more than 50 acres and involves mixed land use with increased density schemes. Notable examples include Mumbai’s Bhendi Bazaar Project and New Delhi’s East Kidwai Nagar redevelopment undertaken by the National Building Construction Corporation.

This approach requires significant coordination between planners and existing residents, as it fundamentally transforms the urban fabric. The payoff is the opportunity to address deep-rooted infrastructure problems that cannot be solved through incremental improvements.

Greenfield development: building from scratch 🔗

Greenfield development introduces smart solutions in previously vacant areas of more than 250 acres using innovative planning, financing, and implementation tools such as land pooling and reconstitution. These projects address expanding urban populations by creating entirely new communities with integrated smart features from the ground up.

Gujarat’s GIFT City and India’s Dholera along the Delhi-Mumbai Industrial Corridor exemplify this approach. Globally, projects like South Korea’s Songdo demonstrate how greenfield development enables embedding technology into every aspect of the built environment, though the capital requirements are substantial.

Smart city frameworks: technology serving outcomes 🔗

While technology is central to smart cities, successful frameworks prioritize outcomes over gadgets. According to Deloitte’s smart city framework, three fundamental goals should drive any initiative: improving quality of life for residents, enhancing economic competitiveness to attract talent and industry, and ensuring environmental sustainability.

These outcome-focused frameworks leverage technology across six urban domains: economy, mobility, security, education, living, and environment. The key insight is that smart cities use technology extensively to achieve specific results for various stakeholders-residents, businesses, municipal organizations, and visitors-rather than deploying technology for its own sake.

Integrating people, policies, and processes 🔗

A truly smart city enables not just smarter things but smarter decisions. Beyond sensors and connected infrastructure, the goal is improving decision-making across all stakeholders through the strategic use of data. This requires integrating people who participate in governance, policies that enable innovation, and processes that support efficient service delivery.

Spain’s SmartSantander project illustrates this integration effectively. The city installed 20,000 sensors while also allowing residents to turn their smartphones into mobile sensors through a dedicated app. City officials analyze real-time data to optimize energy use and service delivery, while citizens simultaneously access the same data for daily needs-checking traffic, finding parking, or planning routes around pollution hotspots.

Value creators: expanding beyond government 🔗

Traditional thinking positions government as the sole provider of smart city services. However, research on smart city ecosystems identifies four types of value creators that drive urban innovation: government agencies, businesses and organizations, communities, and individual residents.

Businesses as innovation partners 🔗

Private sector organizations create services that use and generate information to deliver outcomes for city stakeholders. Companies like Uber and Lyft transformed personal mobility, while platforms like Waze and NextDoor have reshaped traffic planning and neighborhood communication. These businesses didn’t wait for government mandates-they identified urban needs and developed solutions that millions now depend on daily.

The growing ecosystem around Columbus, Ohio’s smart city initiative demonstrates how private partners contribute beyond just funding. Companies brought expertise, technology, and user-focused innovation that multiplied the initial public investment into a comprehensive urban transformation program.

Communities and residents as co-creators 🔗

Communities function as miniature smart cities with localized needs. University campuses, office parks, airports, and apartment complexes all require tailored smart services for their specific stakeholders. These community-level initiatives often serve as testing grounds for solutions that later scale citywide.

Individual residents also create value in ways previously impossible. A resident can point a camera at a dangerous intersection to stream information to traffic planners. Homeowners install air quality sensors that share pollution and pollen data with neighbors. Louisville, Kentucky’s AIR Louisville program equipped asthma patients with sensor-enabled inhalers, creating a citizen-powered health monitoring network that helped participants reduce rescue inhaler use by 82 percent.

The layered structure: value and innovation 🔗

A smart city operates as an ecosystem of multiple capability layers, each playing a distinct role. The smart city ecosystem framework identifies several interconnected layers that must integrate and coordinate to deliver meaningful outcomes.

The value layer 🔗

The value layer is the most visible component for city residents, businesses, visitors, workers, and tourists. It represents the catalog of smart city services-the applications centered around specific outcomes-offered by value creators and consumed by stakeholders. This layer is where abstract smart city concepts become tangible benefits: real-time transit updates, streamlined permit applications, or optimized parking guidance.

The innovation layer 🔗

Staying relevant requires continuous innovation. The innovation layer encompasses programs that enable value creators to update and improve services for stakeholders. Smart cities facilitate this through innovation labs, designated innovation zones, training programs, ideation workshops, skills development initiatives, and partnerships with universities and businesses.

This layer ensures that smart city services don’t become outdated. As technology evolves and citizen expectations change, the innovation layer provides mechanisms for testing new ideas, piloting solutions, and scaling successful innovations across the urban environment.

Supporting layers 🔗

Additional layers provide the foundation for value creation and innovation. The governance layer handles the digital transformation of existing processes and services, integrating new business models and measuring performance with updated metrics. The policy and financing layer establishes engagement models, rules, and funding sources for building and maintaining smart city infrastructure. The information layer manages data through open data initiatives, analytics services, and privacy protections. Finally, the connectivity layer ensures seamless, secure connections between people, devices, and systems.

Moving from vision to action 🔗

Smart city development succeeds when all these elements-competitive selection, appropriate development models, outcome-focused frameworks, diverse value creators, and integrated capability layers-work together coherently. The competitive funding approach ensures only well-prepared cities receive resources. The choice between retrofitting, redevelopment, or greenfield development matches the intervention to local conditions. Outcome-focused frameworks keep technology in service of human needs. Multiple value creators bring innovation beyond what government alone could achieve. And layered architecture provides the structure for sustainable, adaptable urban systems.

For cities beginning their smart journey, the path forward involves understanding this ecosystem approach rather than focusing on isolated technology deployments. Success requires building coalitions across government, business, and citizen groups while developing competencies across all capability layers.

What do you think? How can smaller cities with limited resources adapt these frameworks to begin their smart city journeys? What role should residents play in deciding which smart city services their communities prioritize?

References

1. https://www.india.gov.in/spotlight/smart-cities-mission-step-towards-smart-india
2. https://smartcities.gov.in/financing
3. https://smartcities.gov.in/about-scm
4. https://medium.com/mckinsey-global-institute/smart-from-the-start-6-examples-of-greenfield-smart-city-projects-from-around-the-globe-2db82ac702e9
5. https://www.deloitte.com/us/en/insights/industry/government-public-sector-services/smart-city/overview.html
6. https://www.iotforall.com/smart-city-ecosystem-framework-model-for-planning-smart-cities
7. https://strategyofthings.io/smart-city-ecosystem