Blog

The form and space of our cities reflects what we have valued and what we value. The banks with their Roman or Greek columns, churches with spires and formal botanic gardens say much about what our 19^th century forebears valued and aspired to. So too, the Mechanic’s Institutes, the surprisingly enduring 50’s state house and the large cloned shopping mall tell us something about how we have defined progress in the last hundred years. This historical footprint has, in large part, been defined by the dominant  energy sources of the time and also the communication technologies that framed economic and social space.  Indeed so powerful are these two forces that when they change their nature substantively their impact is often called revolutionary. What this article will argue is significant energy and communication technology change is upon us that we are now in the early phases of profound revolution. Further that evolution must and should be rapid. While this is in part driven from some serious concerns that must be addressed, it will suggest that this reframing provides many of  the most significant investment opportunities of the next few decades and that those who are more ‘foresightful’ are already on the path. It will also contend that the failure to rapidly transition will consign the laggards to a world of unsustainably high costs, decaying fabric, inappropriate regulation and standards  and profound dislocation.

Our context is profoundly changing.

About 200 years ago our urban fabric was shaped by what  has come to be known as the first industrial revolution. Great factory based cities sprang up and the infrastructures of the steam age reshaped our landscapes. Perhaps even more importantly, the widespread availability of cheap printed newspapers, magazines and books kick started universal education and democratized learning. A key feature of this steam age society was an increase the power and wealth by those who owned machines. It ushered in an idea we now call ‘capitalism.’

Just over 100 years ago, a second revolution occurred.  Quantum leaps in energy efficiency came with the introduction of cheap oil and electricity. It allowed us to build a new prosperity largely driven though powerful technologies that allowed us to access almost every conceivable resource on the planet, for the most part without care or regard. It made it easy for us to create the suburban world as we know it. It provided a passport to a time where the average person could and does live better than the monarchs of just a few hundred years ago. This shift was greatly aided by telephony and from mid century by television and early digital. Almost all the ways we think about success and progress; the modern motor vehicle being a stand out example, came in this revolution. The pace of transformation (1912 to 1922) was also startling as the historic records and modern fiction like “Fall of Giants” [i] testify. Monarchs fell, nation states rose and wealth ( and fame) not class became the basis of status.

Now according to transformational theorists, like Jeremy Rifkin, a 3rd Industrial Revolution is underway. In this revolution, we will rapidly transition from expensive oil and electricity to what he terms as five interdependent pillars. The first of these pillars requires that we move rapidly from fossil fuel generation to cost effective renewable fuel generation.  At the time of writing there is considerable evidence that the cost of renewables per kw/hr is already cheaper than most fossil fuels and certainly nuclear. The second pillar envisages a world where every building becomes its own power plant. If this sounds too far fetched then remember so did wiring every home and factory 100 years ago.  The third frames a future where storage at the point of end user generation  plays a key role in both regulating demand and trading of energy. The fourth pillar provides for information interconnectivity in order to manage both ‘microgrids’ and ‘intergrids’ and finally the fifth presages a future where electric engines replace combustion technology. This energy revolution will be one of the acupuncture points (little effort, great effect) in the shift to a distributed society. It will make it easy for suburbs to reinvent themselves as interconnected village type communities, freed from the constraints of location. This freedom Castells’ suggests “allows for an increasing disassociation between spatial proximity and the performance of everyday life’s functions.” It will see “the demise of cities as we have known them until now, once these (associations) are voided.”  [ii]

Finally it is unlikely that this revolution will take more than another decade or so. It is both the scale and speed of the transition that frames the opportunity for actors in the property sector. As Mark Cass, the President of the Construction Industry CEO Round Table contends,

“Jeremy Rifkin’s 3^rd Industrial Revolution sets forth a comprehensive realistic, technically sound model for transitioning the global economy into a more sustainable future. Rifkin’s vision of ‘distributed capitalism’ strikes a powerful chord among CEO’s in the design and construction industries who will be tasked with turning theory and promise into practice”[iii]

 

Stepping back from the cliff.

Unlike earlier revolutions, we have other reasons to make this transformation sooner rather than later. One of the by products of our resource driven progress has been to fundamentally alter many of the planetary conditions that make the Earth conducive to human habitation. Much of our wild foods and biodiversity has disappeared. At a global level, usable fresh water stocks are dwindling and topsoil fertility is eroding. Oceans are acidifying and Arctic summer  sea ice will, in all likelihood, be a thing of the past. Many of our urban environments produce excess wastes that are now hard to dispose of. Some have such toxic air as to make day to day living a health hazard. Most concerning of all, as the science from all the world’s great scientific academies suggest a future (circa 2060)  of more than 4 degrees global warming is more likely than not. The World Bank has described this as “so dramatically different from today’s world that it is hard to describe accurately.” [iv] As each of these environmental tensions begins to effect the others, our children and grandchildren are unlikely to think about us kindly if we simply keep on with business as usual.

The ‘canary in the coming disaster mine’ is our food system. As Paul Ehrlich in a recent Royal Society address points out, “no civilization (and ours is now global) can avoid collapse if it fails to feed its population.”[v] Such a scenario is possible not as some distant possibility but potentially in the next few decades. Significant challenge will come, for some, from a combination of soil and water shortages. For others it will arise through the unsustainability of a technology-dependent (oil) production and distribution systems. The good news is that all the technologies and case studies to overcome this disjunction are known and can be easily implemented. However significant rethinking is required. Protection of the most fertile production areas is vital. Turning this protection into reality will require a major repositioning of how our cities are ‘developed.’ It is concerning that none of our large cities have coherent periurban strategies that protect these vital spaces and that those who advocate such thinking are seemingly marginalised. A second important consideration for those in the property sector is  a new green revolution. This will require designs and plans for a future where some of the food that urbanites require is grown in or on (rooftop gardens) the cities themselves.

The sheer scale and speed of what is coming towards us seems almost overwhelming. It is of course understandable that some, in order to stay sane, will simply deny everything. But history shows us that those who have the humility and courage to reinvent themselves will be those who lead us into this new age.

The ecology of distributed capitalism

Just as earlier revolutions ushered in an era of ‘capitalism,’ based on machine ownership and efficiencies, this revolution will see an evolution into what might be called ‘distributed capitalism. At the core of this shift is a fundamental change in form and space from Newtonian mechanistic, centralized and efficiency based concepts to a new world view based on networks, distributed form and whole of system thinking. This a world that is better described using ecological metaphors, rather than the machine ones we are so used to. It will reshape every organization Firms such as GE suggest that this will need to occur within the decade.[vi] It will transfer power from suppliers to those that generate demand. It will favour collaboration over competition and above all it will drive new ways of doing business, or what are often termed business models, It is this revolution in how we do things that often makes traditional offerings obsolete overnight.

One of the key features of today and tomorrow is that the cost of information exchange has been radically reduced. Historically many organization’s had particular sizes and structures  because the cost of information transfer, both specific and general, outside their boundaries, was simply too high. Now, well organized, networks of specialists can be rapidly formed to compete with many large centralized entities. They can even be used to create new sources of funding or even build strategy [vii] through ‘crowd sourcing.’ Tellingly, these entities normally have significantly lower costs and a higher focus on outcomes. This is a future were being bigger offers little advantage. There seems to be no reason why this shift in organization form will not impact all the larger players in the property sector.

The age of mobile devices and the next generation of energy technologies is continuing to shift power away from those who supply goods and services to those consumers who, through using these technologies, can shape and define demand. In other worlds these technologies are enabling each of us to become our own architects of everything we do and demand. This shift of course sits uncomfortably with those whose ‘supply side’ power has hitherto been unchallenged. This blind spot is the door through which new competition will spring.

The new competitors also understand that their power lies in creating, innovating and delivering through networks of seamless collaboration. They have little time for those who are distracted and waste energy in a red ocean  of competition; a place where often there is destruction of value and a race to the bottom. It is interesting to note that the World Economic Forum declared that “to survive and prosper business must be ready and able to collaborate effectively.”[viii]  Collaboration is in a sense in the DNA of the emerging networked society. For example, recently a leading community housing provider began to develop programs where tenants with skills were given the opportunity to bid and deliver services to other tenants. Care was taken to ensure that what was being provided was both competitive and to the standards required. The benefit of course is that those tenants now enjoy income streams, which in turn ensures that their ability to pay their rent has increased. This same Group is now investigating a whole range of energy saving programs, including solar, where they will pay most of the upfront cost and then take a share in the benefit generated by the savings over time.

In this world, success lies in designing everything from the point of demand backwards. This, by definition, requires the ability to deliver for diversity (flow) rather than a ‘one size fits all’ (scale). Again there are proven case studies to support this. The Toyota’s production system, as designed by Taiichi Ohno, is absolutely designed on this ‘flow’ model. In contrast, Ford Motor Company and others, are focused on an economy of scale, supply driven model with a bit of lean thinking added in. The ability to use far fewer resources to create the same or significantly more value is the essence of new business model design.

All of these elements of distributed capitalism leverage from a reframing of form and shape over time. They provide a structural disjunction, driven from a very different world view. The stories and anecdotes celebrate the ‘cool’ power of networking and collaboration over splendid isolation and competition. The implications for both new development and retrofitting of our urban fabric are profound.

New Design and development for a networked society

We have in our own backyard an important project, we could all learn from, the rebuilding of the Christchurch CBD.  It’s interesting to observe that the good citizens of that city have lived without a CBD, or what some have rather uncharitably called industrial age people factories, for over two years. However they have committed to rebuild. From a distance, what seems to be missing is an overarching narrative that might shape the thinking about form and space beyond the river and precincts. Perhaps that narrative might be shaped by a commitment that would see them being the first “new, global” 21^st century, distributed society, city. Such a move might even attract many of the young that have left and it could be a focus for a new kind of tourism. Again this kind of thinking is not without precedent. It draws on the logic of the successful rebuilding of the small Kansas town of Greensburg as the ‘greenest small town’ in the USA. Further it would be a step beyond Masdar, in the Arab Emirates. That project while focused on green technologies, is firmly in the grip of a mechanistic centralized mindset.

But it is not only Christchurch, Masdar, Roma or Monaco that needs a new narrative. We all do. This narrative must drive new conversations that give life to a new renaissance in form and space. It is almost unconceivable that this in turn will not demand a reframing of how we design, plan, regulate and collaborate. No part of the property sector would remain untouched.

Central to this renaissance will be giving preference to system integrity first. This is very different from our 20^th century legacy where we have rewarded those with a focus on their bit, often with complete disinterest or disregard for what is around it. As a consequence, the socio-economic costs associated with such disregard have been borne by the whole society. Now, as the capacity to absorb such costs has reached rock bottom, attention must be focused on how each piece fits into the whole and how one part integrates with another. A recent ARUP concept paper “It’s Alive” argues “we will live in cities where everything can be manipulated in realtime and where all components of the urban fabric are part of a single smart system and an internet of things.” [ix] Others like Rachel Armstrong argue for a radical rethink beyond steel and concrete. She suggests “should we as living entities be living inside dead habitats. Our structures could become living objects, responding to the environment.”[x]

Perhaps the biggest conceptual leaps, in both the narrative and the system view, come from an acceptance that the age of the combustion engine is over. The future suggests preference be given to connectivity first and physical connection, outside the bounds of ‘the village,” second. Thus attention must shift from large and remote generation of energy to the development of networks of microgrids. Such grids, as with the internet itself, are significantly more resilient than our current infrastructures. The story is the same in the management of water where ‘water sensitive city’ design based on catchments must become the norm. In sum our design and development must move from ‘cradle to grave’ concepts towards ‘cradle to cradle’ thinking.

 

Similarly attention will also need to be given to both institutional fabric and the nature of public land/space, as the forces of the distributed society are shaking the foundations of almost everything we know and cherish. Perhaps the following are illustrative of the kinds of questions we might ask. In a world of crowd sourcing what would a town hall be needed for? What do future learning centres (or schools and universities as we used to call them) look like in a world where content can be accessed from anywhere and where new business models are reframing the relationship between content and assessment? How do our community portals need to evolve or will we continue to favour the refuge for the printed book? What does the network of health care become in a future where home based care and remote medicine are both more cost effective and more socially desirable. One thing is certain. The distributed villages will place great importance on 3^rd spaces and in an integrated world these must be designed with care.

Retrofitting for homo urbanise

In one sense, the design and build of new spaces is easy. It is overcoming what imprisons us in the past that requires real innovation. But again as with every other contention in this article, there is useful thinking and well proven case studies everywhere that will help us make real a narrative that shifts us all from suburbia to interconnected villages. It is not within my remit to turn this into a debate on expertise, but principles of reuse, remembering, revising, repairing, and resilience help shape and define what investing in quality means. They seem to catch ideas, some borrowed from elsewhere[xi], that take us in the right direction. No doubt there are others. In short they can be summarized as follows:

Reuse the boxes: As much of our commercial fabric empties out (which is what a shift to on line shopping in a constrained consumption world will do) buildings and malls can be retrofitted as new age high streets, residences and activity centres close to the village hub.

Remember what creates communities: Integration and connection suggests a planning mindset where people spaces come first and the car comes second. No longer should great roads divide communities; in the process creating  depression, increased insecurity and loneliness.  Instead the focus should be on rediscovering and re-emphasizing why making everything walkable is fun. It will also be important to better understand how many, in a multicultural and diverse society like ours, value and use unstructured public space very differently than was the convention in Victoria England.

Revise rules to encourage not inhibit transition: Our society is awash with rules, regulation and standards, based on technical data and concepts, that are mostly past their use by date. There is an urgent need for a public sector reformation that can set us free from the soup of information toxicity that threatens to drown us all. The narrative of a distributed society provides a perfect opportunity to do just that.

Repair infrastructure fabric so that environment is at the centre. Until recently,  the environment has always been subordinate to the pursuit of economic growth. Now in a post resource growth world, societal attention is turning to recreating and restoring environments. This restoration is central to the health of the villages as well as providing what might be termed  the next generation of useful work. Some of the vast areas of poorly used tarmac might be a good place to start.

Realize that diversity is the basis of resilience. Much of history in the last two decades has been to drive diversity out of shape and form. What has emerged has been hectare upon hectare of cloned houses and shopping malls that promote endless choice but seem strangely devoid of meaning. As a result many take cheap flights to elsewhere in order to experience real societies! The great transition must eschew endless choice and rediscover what creates meaning. In a world where the nuclear family is a minority group increasing the diversity of housing choice and price design is an easy place to start.

Finally the retrofitting of homo urbanus must be a flight away from a ‘cheap is best’, built in obsolescence, throwaway mentality to a future where the investment is in quality. If there is one thing that the GFC should have taught us all is that if there is little capacity to incur more debt and disposable income is shrinking then investment must be in either goods and services that last a very long time or in things with a  short shelf life that can be easily reused or recycled. To overcome the tendency to always go towards lowest price, greater transparency around whole of life pricing and what are euphemistically called ‘externalities’ is required.

Getting past the noise 

The shift towards this distributed future is a point of tension. Some will want to pursue their short term interests regardless. Others will argue strongly for transformation. This ‘tension’ demands of each of us a willingness to have new conversations, for it is certain whatever the future we all have to share it. Somehow it is important that we have conversations  that move beyond the noise and blame that seems to dominate so much of our polemic. This will require narratives that are more inclusive and all to contribute. In one sense there is no choice. The essence of the argument is that new energy and communication technologies will rapidly alter the nature of form and space, irrespective of what each of us thinks. This in turn will redefine what is understood by success and failure. The evidence is the time for such conversation. It would be a pity to squander, through a lack of leadership and imagination, the opportunities that this significant crisis brings.

Global Foresight Network.

This article is a synopsis of a keynote speech given to the 2013 RMIT School of Property Construction and Project Management Industry Partnership day.