There are numerous strains of “smartness” in today’s economy, and a multitude of sincere and exciting efforts to get smart in various places and sectors.

Along with all of this activity comes questions about what it means to be smart, what are the goals and intended results, and how can they be measured.

Philosophy, psychology, economics, and other social sciences provide good answers. This brief essay is a synthesis of what is known about being smart.

Smartness is all about behavior. It flows from decisions and is based on information, but results are evident in actions and results. Talking and planning are actions that are evidence of smartness, but which are not necessarily smart. It is easier to behave intelligently after you’ve talked about it and planned for it, but talking and planning are only smart if they’re based on true information and acted on in thoughtful, flexible manner. Possibly most importantly, smart behavior considers, enables, and supports others. Intelligence can only be truly judged in terms of the scale and scope of benefits and the scale and scope of persons who experienced those benefits.

Let’s break this down. There’s you, the actor (the “consumer” or “principle,” in economic terms). You do things in your own interest—as an “agent” for yourself. Those actions affect others. You interact with them, and others interact with you. Interaction necessarily affects those involved (otherwise it’s not “interaction”). Effects of interaction can be beneficial or detrimental or both. Whether one benefits or not is almost entirely based on the information available and how it is interpreted and used.

Smart interaction benefits everyone involved. Any activity that does not benefit all involved is not as smart as it could be. The smartest activities enable participants to make more benefits in the future as well as benefit everyone based on their contributions. So, capabilities—what people (and, by extension, groups, organizations, communities, regions, etc.) can do with what they have—is a the fundamental indicator or metric for smartness along with direct benefits and costs. The basic factors are activities (what people do) and assets (what they have), including information. How we break these down and measure them are topics for future essays.

Whether it’s a smart city, a smart grid, a smart home, or a smart manufacturer, any smart thing can be evaluated in these terms.

The first characteristic of smartness is awareness and understanding of those impacted by your actions. A smart city methodically studies it’s population and economic base. Citizens and visitors to the city must be engage in this process—the city helps them be self-aware—because they are the city. A smart enterprise involves clients and customers in a learning process along with its employees and investors. Smart buildings, infrastructure, and utilities feed information back to their inhabitants, users, and customers so they can make better decisions and act smarter.

Smartness comes from many different sources. Executives and owners are smart to think about how they benefit from everyone else. This is the second characteristic of smartness: It is necessarily bottoms up, distributed, and inclusive. You can’t be smart alone. Truly smart organizations and people appreciate and respect everyone’s contribution, which is demonstrated by leaders. Smart leaders encourage others to lead and foster overall leadership in their areas of interest. Again, this is true whether we’re talking about smart devices and smart places: They are smart because those in charge of resources and making decisions about these things what to enable others. Smart leaders help others to be autonomous, to belong, and to be competent.

Undergirding smart behavior are mechanisms for acquiring, processing, storing, and transmitting information. The third characteristic of smartness is access to information sources and systems. The mechanism have to exist, must be integrated together into systems, and then made available to stakeholders—those who have an interest in the systems functionality. All activities and assets within homes, organizations, and regions can be assessed in terms of how they contribute to and use information systems. A critical part of this is awareness of those systems. Information systems—well, any artifact—are value-laden, which someone put into the system to serve certain interests. Smartness involves critical analysis of systems. It is stupid to take systems for granted and not think about what went into them or how they work.

This leads to a fourth characteristic of being smart: It is not stupid. We like to talk about being smart but really don’t like to admit it when behaviors are stupid. “Stupid” simply means the opposite of smart: It doesn’t serve anyone’s interests, or it generates a lot less benefits for many fewer people than an alternate (or no) action. To be smart we must be clear and forthright about things that don’t serve others’ interests or, worse of all, negatively impact their capabilities and functioning. This is never easy and can be hurtful, which leads us back to the earlier aspects of smartness: Determinations of smartness and stupidity must be based on inclusive, methodical, and rigorous assessment of benefits and costs—direct and indirect, hard and soft—including who does and does not benefit from and pay for the activity or asset.

Here’s the big, general, practical characteristic of smartness: Being smart involves investing effort and money, based on carefully considered and tested ideas. Small and incremental tends to be smarter than massive and monumental, unless activities are repeated without concern for results. Pay attention to results.

You can’t be smart without trying. You have to put something into smartness; sometimes you have to put in a lot. The benefits can be small at first, especially when past actions were hurtful and stupid, but smart is also persistent. Yes, you have to know when efforts are futile or best spent elsewhere—avoid stranded investments, don’t throw good money after bad, ignore sunken costs, and all that stuff. That’s smart. Which means it’s smart to know when something is not getting any benefit. Not coincidentally, such knowledge tends to come from and involve others. So, generally speaking, smart is inclusive and social. It is smart to spread costs and generate more benefits.

In conclusion: Smartness enables people to pursue common and complementary interests. Cities, enterprises, and even infrastructure are basically just means for action, so their smartness is determined how people behave in and around them. They are smart to understand what is important to those people. Smart activities include Indicators and metrics because its in everyone's interests to understand the distribution of benefits and costs. Smart enterprises and institutions—and the smart people who run them—celebrate and reward smart activities and deploy smart assets inclusively, and encourage everyone to contribute to and benefit from them.

by Greg Laudeman