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Smart Cities Series: Failing Gracefully and Other Lessons from Tel Aviv

By - Nov 30 2016

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Are cities engines for development and economic growth? In a previous post, the IDB’s own Mauricio Bouskela, a Senior Specialist on Housing and Urban Development discussed this question, providing us a concrete image of what a “Smart City” should look like and the great value it can hold for development efforts. Yet what lessons learned can we draw from as we work to build the “Smart” aspect into cities everywhere? For an idea of this, Dr. Eran Toch of Tel Aviv University joins us for the second installment of our three-part Smart Cities Series, discussing the importance of fostering innovation in urban centers, and how to do it.

IDB: Israel is known as a hub of innovation. Looking to entrepreneurship as a measure of this, let’s just consider that the Startups and Venture Capital in Israel Annual Report, in 2015 the total number of new startups in the so-called “Startup Nation” rose to 1400. How can Latin America and the Caribbean attempt to replicate this innovative and entrepreneurial culture at home?

Dr. Toch: An element I find critical to innovation is the ability to fail gracefully, the ability to make mistakes and not be ruined by them. This ability is alive and well in Israel. For example, I myself have worked with other co-founders to initiate two startups, and neither succeeded. Those experiences helped me to learn things and to move on, and today allow me to do my work more effectively than what would otherwise be possible. If this acceptance of failure as an important learning experience can be fostered, and if society doesn’t look upon trial and error as a complete failure, innovation is facilitated. This sort of approach is very important for Smart Cities, because even today’s urban experts don’t know what is going to work. To further complicate matters, every city is a different and complex network. Innovation is important for them to flourish, but it’s difficult to pinpoint where exactly innovation comes from. Within cities, innovation comes from different places. This means that there must be a culture of innovation within the municipality, the government, the people, the industrial sector, and the commercial sector, and all of these actors need the ability to fail gracefully. The way I look at it, innovation is about much more than the positive lessons learned—it’s also about the negative lessons and the obstacles encountered by innovators along the way.

 

IDB: How has Israel cultivated this positive attitude towards failure, in which failure is accepted as an inevitable and often necessary steppingstone toward something better? And how can this be replicated throughout the Latin American and Caribbean region?

Dr. Toch: Cultures are difficult to change, but something practical that can be replicated is money, or the development of a venture capital (VC) network. Venture capital differs from traditional financing in that entrepreneurs and innovators don’t receive VC loans, but rather VC investments. VC investors are cognizant that nine times of out ten, they won’t get their investment back. In Israel, this VC culture brings together public and private sector investors, all of who know that many VC investments will be channeled towards ideas that will fail. So if entrepreneurs are backed by this kind of investment—and if they are able to focus on startups without having to mortgage their house or risk their ability to provide for their families—they are better able to work and to innovate. Critically, this kind of financial arrangement doesn’t depend on culture, but can change culture. So if you are part of a community in which enough people didn’t successfully launch a startup, but still learned from the experience and went on to apply it to other entrepreneurial ventures or positions in larger organizations, society will change the way they perceive investment and failure, for the better.

 

IDB: You have joined us today for a knowledge sharing seminar, in which municipal actors and experts come together to transfer learning and best practices that can accelerate and improve sustainable urban growth. What is one take away that you consider noteworthy?

Dr. Toch: First of all, I am deeply impressed with this Smart Cities Seminar. I’ve never seen this kind of concerted effort to fill the missing link between abstract research and knowledge, and the real world. And one of the most noteworthy takeaways of the day is the focus on reviewing comparative analyses and comparative models of Smart Cities. These models allow cities – let’s say you are representing a city in Chile – to consider whether the Rio de Janeiro model, or the Seoul model, or the Tel Aviv model works best as they look for concrete examples to guide their urban development efforts. These models allow cities to compare and identify those that they can best learn from as they work to advance progress in their own municipalities. So for instance, if a city finds a fantastic model but later realizes that said model requires too large of an infrastructure investment or maintenance costs that are simply too high, they can look to other options as well. This is the kind of knowledge that can enable policymakers and business actors to make smarter decisions, and to build smarter cities as a result.

 

ABOUT ERAN TOCH: Eran is a Senior Lecturer at the department of Industrial Engineering at Tel Aviv University. Eran holds a Ph.D. from the Technion – Israel Institute of Technology and was a post-doctoral fellow at the School of Computer Science at Carnegie Mellon University. Eran’s research interests are information systems, information privacy, human-computer interaction and big-data analysis. Eran’s research group is now working on various projects that revolve around computational analysis of human behavior, with applications to smart cities, mobile computing and cyber-security. The group’s projects are funded by agencies such as Israel Science Foundation (ISF), EU Horizon 2020, U.S. DARPA, Israel Ministry of Science, and other national and international programs.

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