Amsterdam Barcelona Berlin Brussels Copenhagen Helsinki Istanbul London .

6CITIESection one: An introduction to CITIE:CITY INITIATIVES for TECHNOLOGY, INNOVATIONand ENTREPRENEURSHIPWhy this is important for city leadersInnovation is disproportionately driven byyoung, technology-intensive companies.1A new breed of companies are reshaping theway people interact with the city around themOver the past few years these new businesses aremoving from suburban research parks to urbancommunities integrated into the heart of the city.2Companies like Uber, Airbnb, Citymapper, Deliverooand JustPark are bridging the digital and the physicalwith location-aware and on-demand services thatcreate new ways for citizens to experience their city.They bring with them considerable benefits to cities.High-growth companies create jobsGrowth is disproportionately driven by young, highgrowth companies. Between 2002 and 2008, forexample, just 6% of high-growth companies created50% of the UK’s employment growth.3Vibrant tech sectors are often the epicentre for newgrowth. New York City’s tech sector directly created45,000 jobs between 2003 and 2013 – 6% higherthan the employment growth rate in New York Cityand 14% higher than the national average.4These are the jobs of tomorrowNot only are these jobs numerous, they are also thejobs of tomorrow. With recent research predicting thatup around 47% of U.S. jobs are at risk of automation,innovative high-growth companies are creating theskills and ideas that cities will need to compete in anincreasingly digital global economy.5There is a growing feedback loop betweenentrepreneurship outside city halls, andinnovative governance within themWhereas city administrations were once relativelyclosed and insular environments, leading citiesare now looking to engage with outside ideas andinnovators to improve services and create newsolutions to complex problems. Individuals andteams within cities are also starting to adopt workingpractices more typically associated with start-upsthan bureaucrats.Tech companies are startingto build services that connectthe physical and digital worlds.It is natural that cities arethe focal point for this kind ofinnovation, which in turn addsto the richness of the urbanexperience. New possibilities arebeing created in terms of whereto stay, how to get around, whatto eat or where to go.Greg MarshCo-founder and CEOonefinestayIt is clear that many cities recognise theimportance of innovation and entrepreneurshipBy looking across 40 cities from around the world,we can observe a growing range of policy initiativesbeing employed by city governments to fosterentrepreneurship both in the private sector as well asinnovation in the way the city delivers services.These efforts have yet to be brought together andanalysed in a systematic way, leaving an importantknowledge gap. We developed CITIE to fill this gap.

7CITIEWhat is C I T I E ?City Initiatives for Technology, Innovationand Entrepreneurship (CITIE) is the productof a partnership between Nesta, Accenture andthe Future Cities Catapult.CITIE provides city policymakers with a resourceto support the development of policy initiatives tocatalyse innovation and entrepreneurship in cities.CITIE comprises four main components:1. A framework for understanding how policy innine key areas at the city level can be used tosupport innovation and entrepreneurship.2. A diagnostic tool that allows cities to understandhow they perform against this framework relativeto 40 global cities.3. A range of examples and case studies that shinea light on best practice from around the world.4. The results and analysis for 2015.CITIE is designed to be used by policymakers incities. To the greatest extent possible, it focuseson those policy levers that city governments haveat their disposal, although this inevitably varies fromplace to place.Explore our framework, diagnostic tool and casestudies with city leaders further at: www.citie.org.When people ask whatcountries can do to fosterinnovation, they’re asking thewrong question. It’s reallyabout what cities can do. Somecities across Europe, the US andbeyond have become hotbedsfor entrepreneurship, withinnovative start-ups driving thegrowth of their economies andserving their inhabitants.Neil RimerCo-founder and partnerIndex VenturesFigure 1: CITIE resourcesCITIE FRAMEWORKDIAGNOSTIC TOOLCASE STUDIESAn assessment of 40 globalcities against a frameworkof policy levers city governmentscan use to support innovationand entrepreneurshipAn online tool to allowcity governments toexplore their performanceand assess how theycompare with their peersA series of case studiesfor cities to learn aboutglobal best practice

CITIEFigure 2: The CITIE FrameworkDREGULATORRDVPOCHIARSATAT E G I SC USTOMTSLEAESDEENNTAEPEDIGIVOROL ROPENNESSHow open is the city to new ideasand businesses?INFRASTRUCTUREHow does the city optimise itsinfrastructure for high-growthnew businesses?LEADERSHIPHow does the city build innovation into itsown activities?R E G U L ATO RHow does the city regulate businessmodels in a way that allows fordisruptive entry?HOSTHow does the city use space to createopportunities for high-growthcompanies?S T R AT E G I S THas the city set a clear direction andbuilt the internal capability requiredto support innovation?A DVO C AT EHow does the city promote itself as aninnovative hub and its new businesscommunity to the outside world?I N V E S TO RHow does the city invest in the skillsand businesses required forinnovation?D I G I TA L G OV E R N O RHow does the city use digital channelsto foster high-quality, low-frictionengagement with citizens?C U S TO M E RIs procurement accessible to smallbusinesses, and does it activelyseek out innovation?C O N N E C TO RHow does the city facilitatephysical and digital connectivity?DATAVO R EHow does the city use data to optimiseservices and provide the raw materialfor innovation?

9CITIEThe C I T I E frameworkAn overview of the frameworkThe CITIE framework provides a resource for citypolicymakers who want to develop policy to supportinnovation and entrepreneurship (Figure 2).It was developed by combining extensiveconsultation with city government leaders, policyexperts, venture capitalists and entrepreneurs withdetailed research into the state of the art in policyfrom cities around the world.There are three levels to our analysis, illustrated inFigure 3:1. Policy dimensions: overarching questionsabout how a city supports innovation andentrepreneurshipOn the basis of this research, we identified that theapproach a city government takes to innovationand entrepreneurship can be characterised by theanswers to the following three questions:OPENNESSa. How open is the city to new ideas andbusinesses?High-performing city governments supportinsurgent businesses by ensuring thatregulations, procurement rules and advocacyefforts work in their favour.INFRASTRUCTUREb. How does the city optimise its infrastructure forhigh-growth businesses?High-performing city governments invest in theirtransport and digital infrastructure, and supportaccess to inputs such as talent and capital thathigh-growth businesses need to thrive.LEADERSHIPc. How does the city build innovation into its ownactivities?High-performing city governments lead byexample, by taking a clear view on how theywant to support innovation, and then using dataand engaging with citizens to do so.2. Policy roles: the nine roles that citygovernments can play to support innovationand entrepreneurshipIn order to answer these questions, we designeda framework that identifies nine different rolesthat a city can play to support innovation andentrepreneurship.City governments can increase their opennessto new ideas and businesses through their rolesas Regulator, Advocate and Customer. Theycan optimise the enabling infrastructure for highgrowth businesses in their roles as Host, Investorand Connector. And they can lead from within thecity hall through their roles as Strategist, DigitalGovernor and Datavore.These nine roles are the focal point of CITIE, andeach is described in detail in the rest of this report.3. Policy levers: the specific policy initiatives weuse to measure how well cities perform theserolesWe tested how well 40 leading city governmentsperform each of these roles by measuring a seriesof policy levers.These levers were chosen to represent bestpractice from around the world. In many cases,they are measures that can be quick to implement,allowing policymakers opportunities for promptaction. The levers are detailed in each section andare set out in full at Appendix 1.City governments must beopen to new ideas that challengethe status quo and help stimulateinnovation locally to competeglobally.Josep M. PiquéCEOOffice of Economic GrowthBarcelona City Council

CITIETaken collectively, these three levels of analysiscomprise the CITIE framework. Figure 3 shows howthey build on top of each other.Figure 3: Constructing the CITIE frameworkDATAVO REREGULATODARRNRVEHIL GORSTADIGIDERVEHIL GOTADEDIGILEATERERSTRAT E G I SCUSTOMTSAT E G I VO OSTINVESTORINVESTOR1. POLICY DIMENSIONS2. POLICY ROLES3. POLICY LEVERSThree dimensions providean overarching narrativefor a city government’sability to influenceinnovation andentrepreneurshipNine policy roles anchorour framework andanalysis on how citygovernments cansupport innovationand entrepreneurshipA series of policy leversis used to assess theperformance ofa city againsteach policy role

11CITIEThe cities in our analysisCITIE has assessed 40 city governments from aroundthe world (Figure 4) against the policy framework.The cities were selected to provide a diverse setof insights across cities of different sizes, culturalcontexts and with different stages of maturity in thestart-up ecosystem.Figure 4: The 40 cities in our analysisHelsinkiVancouverSeattleSan FranciscoLos AngelesTorontoChicagoBostonNew York CityCopenhagen TallinnMoscowAmsterdamBerlinLondonPragueBrussels Paris ViennaBarcelonaIstanbulTel AvivBeijingSeoulTokyoDohaRiyadhDubaiNew DelhiHong KongBangaloreBogotáNairobiSão PauloSingaporeJakartaJohannesburgSydneyBuenos AiresMelbourneAmsterdamNetherlandsBuenos AiresArgentinaJakartaIndonesiaNew York sburgSouth nhagenDenmarkLondonUKPragueCzech RepublicTallinnEstoniaBeijingChinaDohaQatarLos AngelesUSARiyadhKSATel an ndMoscowRussiaSão PauloBrazilTorontoCanadaBostonUSAHong lsBelgiumIstanbulTurkeyNew DelhiIndiaSeoulSouth KoreaViennaAustria

12CITIESection two: THE ANALYSISNine roles city governments can play to supportinnovation and entrepreneurshipOur analysis revolves around nine policyroles that city governments can adoptto support innovation and entrepreneurship(Figure 2).Each is important in its own right, but taken togetherthey can create an environment that is optimised tosupport innovation and entrepreneurship.Putting the nine roles in contextBelow, we set out a few points of context that helpdescribe how the policy roles relate to one anotherand how best to interpret them.1. Some policy roles imply a direct focus onprivate sector entrepreneurship. Others aremore about innovation within city hall. Thesystem as a whole works best when these worktogetherPolicy roles such as Regulator, Customer andInvestor directly define how a city governmentengages with and supports businesses.Getting them right tends to require an explicitcommitment to prioritise entrepreneurship.Other policy roles such as Strategist, DigitalGovernor and Connector are less explicitlyfocused on entrepreneurship. Measures such aslaying fibre, digitising public services or buildingan internal innovation team serve a wider rangeof policy objectives. Nevertheless, they formimportant components of the overall businessenvironment.Entrepreneurship outside the city hall andinnovation inside it are complementary to eachother.2. The extent of control over each policy levervaries between different city governmentsWe have tried to focus on areas in which citieshave direct policy levers to work with. However,the delineation of powers between national,regional and city-level government variesconsiderably around the world.We have tried to accommodate this withinour analysis where possible. We have alsoaccounted for less direct measures that citygovernments can take when they do not haveformal powers, such as advocacy, matchmaking,educational campaigns and marketing.Increasingly, these tactics are being deployedthrough partnerships with private sector actorsand other key stakeholders in the city.3. The areas that a city government has themost direct control over do not correlateperfectly with the things that matter most toentrepreneursFor example, access to capital is crucial toentrepreneurs, indicated by the rapid growth ofthe alternative finance market, such as equitybased and reward-based crowdfunding.6 Itis therefore not surprising that we can see anumber of cities making efforts to support theseinputs, but they are rarely the principal actor inthese areas. Risk capital markets are primarilyprivate, and few city governments have directcontrol over school curriculums or the quality oflocal universities.In contrast, all city governments have controlover how they run their procurement or whatthey do with their data. These factors are veryimportant to some businesses, but less so toothers.Figure 5 sketches the relationships betweenhow important different variables are toentrepreneurs and innovators, and how muchcontrol a city has over them.

13CITIE4. The wider cultural and economic context ofa city is also important, but we have kept ouranalysis focused on the policy levers that citygovernments have at their disposalquality of bars and restaurants, all make a cityattractive. But, in general, it is difficult to holdcity governments directly to account for them, atleast in the short or medium term. As a result, wehave excluded them from our analysis.Considerations ranging from house prices, crimelevels, school quality to cultural vitality, to theFigure 5: Factors important to entrepreneurs that city governments can influenceDirect controlDigital servicesCity innovationvisionCity innovation teamand leadershipOpen dataOpen policymakingAccess to customersSmart cityanalyticsInternationalnetworksCost and availabilityof workspaceAbility of the city to influenceSupport and advocacyMobilityPartial control ingopportunitiesTalentDigitalinfrastructureAccess to capitalHouse pricesIndirect influenceover the long runQuality of lifeCultural vitalityUseful to someImportant to someImportant to the majorityImportance to entrepreneurs and innovatorsFactors included in our analysisFactors not included in our analysisThe remainder of section two gives an overview ofeach of the nine roles that city governments can play.For each of these roles, we: Set out why it is important. Identify the specific actions we look for toindicate good practice. Show how each city performs. Describe examples of good practice, andextracts of the detailed case studies that can befound at www.citie.org. This case study materialis designed to highlight what good practice lookslike globally so that other cities can learn from it.

14CITIEOPENNESSHow open is the city to new ideasand businesses?R E G U L ATO RHow does the city regulate businessmodels in a way that allows fordisruptive entry?A DVO C AT EHow does the city promote itself as aninnovative hub and its new businesscommunity to the outside world?C U S TO M E RIs procurement accessible to smallbusinesses, and does it activelyseek out innovation?

15CITIECITY AS REGULATORHow does the city regulate business models in away that allows for disruptive entry?Why this is important for city governmentsand entrepreneursRegulatory compliance is something that allbusinesses need to make sure they get right. Thiscan be particularly challenging for companiesthat bring new business models to market whichchallenge the assumptions made by regulations froma previous era.Often it is the city authority that has to determinehow these new models will be regulated, particularlyin markets that operate at a city level, such as ondemand taxi services and short lets. This is a delicatebalancing act.Digital technologies are increasingly disruptingpreviously well-defined industry boundaries, givingrise to new business models. These can create valuefor businesses and consumers alike. For example, inSan Francisco the short-term holiday rental platformAirbnb is estimated to contribute 56 million in localspending and support 430 jobs in the city.7However, such businesses often present novelchallenges for lawmakers and regulators - should aspare room be treated in the same way as a hotelroom? They can also threaten legacy businesses,which will often respond by seeking regulatoryprotection from what they perceive as unfaircompetition.High-performing city governments are finding ways toaccommodate innovative new business models intotheir local economy.This does not mean crudely deregulating markets,nor does it involve using regulation to protectincumbents. Rather, it is about taking measures tomake sure that regulations keep up to date with newideas and technologies.We used contemporary examples of disruptivebusiness models – shared lets and on-demand taxiservices – to test how well city governments do this.We assessed whether city governments:a. enforce existing regulations proportionately; andb. keep regulations up to date in response tochanges in the marketWhat we looked for in citiesENFORCE PROPORTIONATELYRESPONSE TO CHANGE1Enforce existingregulationsproportionately2Review andupdate regulationsto take account ofnew businessmodels3Engage the fullspectrum ofstakeholders tocraft balancedregulationProportional enforcementensures that old regulationsdo not block new entryover technicalities.Regulation becomesbetter able to takeaccount of pace ofchange.Engaging with allstakeholders helps toconstruct fair andbalanced regulations.

16CITIECITY AS REGULATORTIER 1How cities performedTOP PERFORMERSTIER 2TIER 3TIER 4BarcelonaBerlinBrusselsJakartaNew York CitySão gotáBuenos AiresCopenhagenDohaDubaiHelsinkiHong KongIstanbulJohannesburgLos AngelesMoscowNairobiNew DelhiParisPragueRiyadhTallinnTel kyoAmsterdamLondonSan FranciscoHow cities are acting as RegulatorIn advance of the 2020 Olympics, Tokyo has set atarget of 20 million visitors a year by 2020. And aspart of its economic growth strategy, the governmenthas designated spe

Nine roles city governments can play to support innovation and entrepreneurship 12 OPENNESS 14 1. CITY AS REGULATOR 15 2. CITY AS ADVOCATE 18 3. CITY AS CUSTOMER 21 INFRASTRUCTURE 24 4.CITY AS HOST 25 5. CITY AS INVESTOR 28 6.CITY AS CONNECTOR 31 LEADERSHIP 34 7. CITY AS STRATEGIST 35 8. CITY AS DIGITAL GOVERNOR 38 9. CITY AS DATAVORE 41 .