Developing alternative business models for smart infrastructure: a UK case study

Abstract

There is a need to identify as wide a range as possible of sources of value arising from a given infrastructure development when creating infrastructure business models. The need for novel, more effective business models is being driven by the UK government's very considerable programme of infrastructure investment, coupled with a reduction in the supply of public capital over recent years and a corresponding increase in the demand for private project finance. To support both public and private infrastructure investment, new business models are required that can internalise the positive externalities associated with public goods. Based on an exploration of the application of soft systems methodology to business model creation, this paper proposes a generic six-step methodology for identifying a wide range of potentially value-generating opportunities and proves its efficacy by applying it to a case study of Tyseley Energy Park in Birmingham, UK. The findings from the methodology, which treats a newly constructed, refurbished or upgraded infrastructure system as a 'business', can then be used to broker the necessary collaboration with all relevant stakeholdersthose who have a stake in the businessto refine the business models and ensure that they are resilient in the face of contextual change.When considered in the light of services to individuals and communities, the concept of infrastructure should not be confined to transport, water, waste management, energy and information and communication technology (ICT). It should extend to a range of social infrastructures, including health, education, culture and green and blue spaces, among others. Dawson (2013) analysed published literature to produce the following holistic definition of infrastructure: 'The artefacts and processes of the inter-related systems that enable the movement of resources in order to provide the services that mediate (and ideally enhance) security, health, economic growth and quality of life at a range of scales' (Dawson, 2013: p. 4). Implicit in this are the links between infrastructures and the wider environment in which they are situated, which offer opportunities for infrastructure to be smarter and generate a wider range of value than that provided solely from an infrastructure's main purposefor example, the provision of electricity.

Delivering sustainable, resilient and liveable cities via transformed governance

“…A suite of alternative 'business models' can then be created that capture the different forms of value that might be generated by the intervention(s), using the system maps to aid in the identification of all potential positive consequences and all potential negative consequences of the intervention(s). Different stakeholders will associate with different benefits, resulting in some of the alternative business models, while iteration of the solutions will likewise provide different sets of benefits and adverse consequences, and hence different business models (Bouch et al, 2018;Cavada et al, 2021). Apart from contributing via informed comments, the City Council will be one of the stakeholders for which business models will be formulated; the City Council has much to gain or lose as a result of systemic interventions.…”

“…Liveable Cities took a systemic approach to understanding the interrelationship between a system of interest and all the other urban systems, effectively establishing the basis of the methodology for formulating business models (Bouch et al, 2018;Cavada et al, 2021) referred to above. The system map for urban green space shown in Figure 2 demonstrates the extensive reach into so very many areas of cities and city living.…”

A Soft Systems Methodology for Business Creation: The Lost World at Tyseley, Birmingham

“…Having established above that creating business models to generate and capture value is a 'wicked problem' due to the lack of a single outcome and a high degree of uncertainty, then an approach that is founded on 'advancing by learning' is necessary. SSM, often attributed to Checkland (Checkland & Haynes, 1994;Checkland & Scholes, 1999), offers a framework for the solution of such problems, which can be conceptualised at a high level as an iterative learning process as shown in Figure 1 (Bouch, Rogers, Powell, & Horsfall, 2018). The process starts with a description of the real-world situation of concern: For example, creation of a sustainable green infrastructure business.…”

Serious gaming as a means of facilitating truly smart cities: a narrative review

“…For this, the systems need mapping to understand how they interrelate, i.e. to establish system dependencies and interdependencies (Bouch and Rogers, 2017). It is likely that once such an integrated system of technologies is in place to support the smart city, it can support a citizen-city decision making process, i.e.…”

“…However the infrastructure required to implement the wider-scale solutions that these digital schemes aim to provide should be reconsidered (i.e. reconfigured or redesigned) to generate the multiple additional forms of value that they could offer, ensuring that solutions are truly smart (Bouch et al, 2018). Engineered solutions (or in the smart city realm, city initiatives) should be conceived as holistic, cutting across different sectors, and resilient, i.e.…”