The Business of Cities: Companies restructure to better serve city markets

Authors: Greg Clark and Emily Moir

Earlier posts in this blog series have seen how global firms are realigning their products and services so as to better cater to cities, as identified in the Business of Cities essay.

Some companies have even developed city-focused brands as a means of unifying and marketing these offerings. A significant number of city-savvy global firms are going even further, and reorganising internally, so as to better align with city-based opportunities.

Siemens is one of a handful of companies which is regularly held up as a pioneer of the new relationship between business and cities. It has built a cities brand based around sustainability: it has invested £30m in The Crystal – a centre of excellence and learning based around cities, it supports the work of the C40 Cities Climate Leadership Group, and it publishes (jointly with the Economist Intelligence Unit) the Green City Indexes – regional benchmarks on city environmental performance. But arguably the company’s most significant step into the world of cities was its first one – the dedication of an entire sector of its business to cities. In 2011, the company established an Infrastructure & Cities division – a division which already accounts for 23% of the firm’s revenue and employs around 90,000 people.i  As Roland Busch, the CEO of the division explains on the company’s website: “Cities are a key growth market for the future. By establishing the Infrastructure & Cities Sector, we’re clearly gearing ourselves to this market.”ii

Siemens is not alone in re-structuring with cities in mind. Other companies which divide their business by reference to cities include BuroHappold Engineering, which splits all its services into sub-sectors of either ‘Buildings’ or ‘Cities’,  and  JLL, whose new Cities Research Center brings together its firm-wide resources and expertise on cities into one department. Other businesses are creating internally-facing cities divisions which act as advisory functions for the rest of the firm. KPMG, for example, has launched a Cities Global Center of Excellence whose mission is to help its offices and member firms around the world to ‘advise and support the sustainable development of cities and the effective provision of city services’.iii  

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Another notable trend in many city-focussed businesses is the long-term placement of company representatives within target cities. This enables companies to market products and services directly to city authorities and other urban customers, using their ‘on the ground’ presence and knowledge to gain a first-mover advantage on new leads and projects. Bank of America, for example, has developed a Market Presidents scheme, placing a ‘president’ in target cities in order to champion the company’s business strategy, deepen client relationships and oversee its CSR activities. Siemens’ City Account Manager network is a similar programme which has installed 60 city account managers in cities across the world.

Yet more companies are becoming intentional about how they build relationships with cities, building corporate strategies and Customer Relationship Management (CRM) systems to manage their interactions with cities as current and future customers. The hospitality company AirBnB has recently unveiled its new ‘Shared City’ strategy, which it is trialling in Portland and San Francisco. The pilot will see AirBnB making it possible for hosts to donate a percentage of their fee to a local cause, with the company matching any donations made. It will also provide free smoke alarms and carbon monoxide detectors to hosts upon request and support city marketing campaigns. More significantly, the company is pondering a more fundamental change to its business-model, by entertaining the possibility of collecting city hospitality taxes from its hosts.

These fundamental structural and strategic changes, which are being made by pioneering companies across the world, suggest that businesses see their new relationship with cities as more than a fleeting romance. City-savvy companies are gearing up for a lifetime of marriage.

 

[i] Siemens:The Company & Siemens at a glance
[ii] Siemens: infrastructure_and_cities
[iii] KPMG: Cities

About the Author

Greg Clark has spent more than two decades putting his passion for cities to good use, by advising and mentoring global cities, firms and institutions. He has worked with over 100 cities around the world and holds senior advisory roles at international bodies including the OECD, Brookings Institution, ULI, and the Future Cities Catapult. A prolific author, Greg has published ten books to date on cities and investment practices, with three more in the pipeline for 2016-17. And as Chairman of The Business of Cities research and intelligence group, Greg leads a small high calibre team that advises and reports on global trends and changes in cities. In his academic life Greg is Hon Prof of City Leadership at UCL and co-chairman of the UCL City Leadership initiative, Visiting Professor at Strathclyde University, and Global Fellow at LSE Cities. He has received international awards for his work from cities as far afield as Barcelona, Brisbane, London, and Toronto and in 2016, Greg was honoured by HM Queen Elizabeth II with a CBE for his services to city and regional economic development. Meanwhile, outside of the day jobs, Greg is an avid tennis player, wine enthusiast, and lifelong follower of Arsenal FC.

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