ECONOMIC DEVELOPMENT QUESTIONS FOR THE FOX CITIES AND OTHER METRO AREAS IN WISCONSIN

David C. Tebo

WI2 Community Consulting, LLC.

Associate, Public Administration Associates, LLC.

INTRODUCTION

In 1872 four entrepreneurs scraped together enough money to start a paper mill in the Fox Cities and called it Kimberly-Clark. Our region has benefitted from that resource-based decision ever since and over time we became the premier paper-making region in the world.

As our fledgling paper companies struggled to survive in the late 1800’s and early 1900’s there was tremendous social upheaval in Wisconsin and the US amid concerns about the future. A new, and yet unknown, industrial age was flexing its muscles and beginning to challenge the agricultural economy for dominance. Immigrants were arriving at a rapid pace from all over Europe causing fears and insecurities for native residents. Revolutionary new questions were being asked about political rights, worker’s rights, women’s suffrage and civil rights.

It seems today we live in a similarly unsettling time of great change and transformation due to new inventions and technological advancement. Thomas Friedman, in his recent book Thank-You for Being Late, observes, “If you look back over human history, only a few energy sources fundamentally changed everything for most everyone-fire, electricity and computing. And now, given where computing has arrived with the cloud, it is not an exaggeration to suggest that it’s becoming more profound than fire and electricity. We have simply never had a tool like this (computing) that could be accessed by people all over the world at the same time via a smart phone.”

Somehow the Fox Cities region was smart or lucky enough to catch the wave of the new Industrial Age and develop and sustain a paper making cluster of manufacturing industries that would protect us economically for the next 150 years.

In today’s time of societal transformation how do we begin to make the wise and sustainable economic decisions that can help us prosper for the next 150 years?

Significant recent studies, of metro areas around the country and globe that have successfully transformed their economies, can teach us much about how we might approach our economic development future in the Fox Cities region and Wisconsin. Especially cited in this short commentary is the work of Bruce Katz and Jeremy Nowak from their 2017 book The New Localism: How Cities Can Prosper in the Age of Populism and Thomas Friedman from his 2017 version of Thank-You for Being Late: An Optimist’s Guide to Thriving in the Age of Accelerations.

THE ROAD TO THE FUTURE GOES THROUGH THE COMMUNITY AND METRO AREA

More and more, commentators and futurists are focusing their attention at the community and metro area level when seeking solutions for today’s and tomorrow’s problems. Those of us involved with institutions at the local level have long understood and experienced the tremendous possibilities for transformation when powered by trust, non-partisanship and common concern for the community. The current political dysfunction and partisanship that we see at the national and state levels of government also tends to bring the search for the most pragmatic and sustainable solutions down to the local levels of decision-making. The following quotes from Bruce Katz, of the Brookings Institution, in Public Management Magazine (Feb. 2018) explains his understanding of this contemporary phenomenon:

“Power is drifting downward from the nation-state to metropolitan areas; horizontally from governments to networks of public, private and civic actors… This power shift is driving a governing philosophy I call the New Localism.”

“Local leaders are accumulating and using power through these non-traditional means: Growing their economies through cross-sector innovation networks; Creating formal and informal coalitions that co-govern to deliver solutions; Unlocking private, public and philanthropic capital to reshape economies.”

Renowned journalist and futurist Thomas Friedman in Thank-You for Being Late offers an eerily similar quote that supports Katz’s observation above. “Eric Beinhocker, Executive Director of the Institute for New Economic Thinking at Oxford, calls this focus on building resilience and propulsion from the bottom up through healthy communities the ‘new progressive localism’.”

KATZ AND NOWAK’S 7 LESSONS: WHAT WE CAN LEARN FROM THE ECONOMIC DEVELOPMENT SUCCESSES OF OTHER METRO AREAS

When researching their book, The New Localism, Katz and Nowak intensely studied economic success stories in many of the US metro areas both large and small, including Pittsburgh, Cleveland, Indianapolis, Chattanooga, Philadelphia, Baltimore, Chicago, Louisville, Cincinnati, Oklahoma City, Dayton, St. Louis, Salt Lake City and Erie, Pennsylvania. These metro areas are recognized for their abilities to transform an "old" economy into a "new" and more sustainable economy for our high-tech world.

Keen observers of our local metro areas and attempts to grow the economy in the Fox Cities and Wisconsin will notice similarities to Katz/Nowak’s recommendations for action below. These should be celebrated, but at the same time fully critiqued and compared with best practices so that we can feel comfortable saying we are doing everything we can to insure a sustainable economic future for our region.

Katz and Nowak gleaned 7 key lessons that other metro areas might learn from the vanguard cities and metro regions studied as they strive to create their own “brain belts”:

1. Strengthen collaboration across universities, workers, companies, entrepreneurs and investors.

2. Success requires a radical ambition that is forward looking: to be on the ground floor of new innovative technologies that can reshape nations, markets and lives.

3. Successful revival reflects the fortitude of investors focused on the long-term.

4. Public and philanthropic investments must be part of a broader political, business, civic and university alliance.

5. An entrepreneurial culture is crucial to success.

6. Build on, rather than discard, the historical legacy of the region.

7. Make innovations visible to the world through place-making and connection to innovations that are taking place in the labs, companies and universities of the region.

RETURNING TO THE ORIGINAL QUESTION: ARE WE DOING EVERYTHING WE CAN TO ENSURE A SUSTAINABLE ECONOMIC FUTURE FOR THE FOX CITIES AND WISCONSIN METRO REGIONS?

Based on the research of Katz, Nowak and Friedman on economically successful cities and metro areas from around the US and world, I believe there are legitimate questions that we should be asking about our economic development work here in the Fox Cities and Wisconsin:

1. Is our cross-sector collaboration across universities, workers, companies, entrepreneurs and investors deep and wide enough for us to take advantage of the innovation possibilities that can come from these important regional conversations? We have some of the top advanced manufacturing companies in the world headquartered in our state and region, are we taking full advantage, with a radical forward-looking ambition, of the opportunities for new cross-sector innovations that could re-shape our economic community, region and markets?

It is interesting to note that many of the successful metro areas in the US have moved from a “disproportionate concern with subsidizing consumption and tourism to a new emphasis on accumulating and leveraging distinctive innovation assets.” Katz/Nowak cite Van Agtmael’s and Baker’s new book, The Smartest Places on Earth, who observe—economic restructuring has rewarded the “sharing of brain power.” Rather than breakthroughs being engineered by the lone genius or “the brilliant pair of geeks in a garage,” they argue, the process of innovation involves “collegial collaboration, open academia, multidisciplinary initiatives and ecosystems composed of an array of important players, all working closely together.”

2. Are our public and philanthropic investments part of a broader political, business, civic and university alliance? As our communities and regions come up against the boundaries of conventional finance for development projects are we adequately identifying and exploring compensating strategies?

Katz and Nowak call these alternate strategies and broader alliances established by successful regions, Metro Finance. Such strategies might contain elements of conventional finance but they contend, “…increasingly metro finance is less about credits, value appreciation (TIF’s), and offsets and more about the creation of new institutional investors and capital sources that have a stronger connection to place and public purpose.” The five most important building blocks of metro finance today, according to Katz and Nowak, are: 1. Philanthropy; 2. Civil society capital intermediaries-Micro-financing, Crowdsourcing, Community Development Financial Institutions (CDFI's); 3. Impact investors-Those who invest into companies, organizations, or funds with the intention to generate social and environmental impact, not just financial return; 4. Public sector related investment intermediaries-Role is to de-risk private capital and use public affiliated agencies and authorities to access the bond market, finance projects with responsibility for direct development and asset management; 5. Research universities.

3. How do we begin to make local Foundation investment in economic innovation, research and product development and business start-ups a legitimate part of their mission and vision for meeting the important needs of the region?

Katz and Nowak hold up the Pittsburgh region as an example of this. “Pittsburgh Foundations view technology-based economic development as a critical component of their social missions and invest accordingly.” It is hard to fault the generosity of local businesses and Foundations, but if we are to listen to the message of other successful metro areas, it would seem we need to develop a new model for our philanthropic community. A model supporting a broader mission for giving, beyond the focus largely on meeting basic human needs of our current region, to one that also attempts to envision what needs might exist for our future economic region and includes the willingness to invest in the innovation, research and development necessary to propel us towards this potential economic future.

4. Have we created, and invested enough in, the organizational structures that will allow us to succeed with economic development in our region?

Katz/Nowak and Friedman suggest several models that we may want to emulate. Many of the successful metro areas studied utilize a large, local CEO led economic development organizational structure. These very formal organizations (often with over 50 or more of the top private and public CEO’s participating + staff), have helped build trust for potential investors that decisions are being made by a large group of local business executives with a vision for the long-term success of the community. They have also created 501 (c) 3 Foundations, connected to their organizations, allowing economic development and innovation to be well-funded by tax-exempt donations. The Central Indiana Corporate Partnership (CICP) and Cleveland Tomorrow stand out as examples of these types of formal economic development structures worth studying that have encouraged and built a region-wide culture of innovation. Friedman discusses a more informal organization that has had success in the Minneapolis area called the Itasca Project, “ a loose coalition of 60 or so business leaders, Fortune 500 executives, educators, local officials, and philanthropists who came together in 2003” with a first goal to drive the growth of the local economy.”

5. Do we have a big enough vision for what economic development and innovation might bring to our regions in the future?

For example, how important is it for the Fox Cities region to begin seeing itself as part of a larger regional economic development system defined by the Interstate 41 Transportation corridor? As one who has worked in economic development, at both the local and regional level in the Fox Cities for the last 17 years, believe me I understand how difficult it is to ask elected officials to look beyond the boundaries of their community. Municipal administrators and Community Development professionals are also limited in what extra duties they can take on beyond city boundaries to support the region. It seems not long ago we struggled just to get localities to buy into a Fox Cities metro economic development mindset. Yet we also know that businesses in our local economy do not typically make decisions based on community boundaries, and we are also learning that they may not even be that concerned about which metro area they are located in. With commuting distances very minimal within the Interstate 41 Corridor from Green Bay to Fond du Lac, local corporations are often searching for locations and employees anywhere within the corridor’s 5 counties of Brown, Outagamie, Winnebago, Calumet and Fond du Lac. Katz and Nowak’s findings, suggest that most successful metro areas and regions around the US, are casting a wider net when identifying their collaborative economic region based on the principle that combining resources for a common purpose is more efficient and effective than competing or operating alone. A recent study (Feb. 2018) completed by TIP Strategies entitled Driving the Future: A Strategy for Fostering Collaborative Economic Development Along the Interstate-41 Corridor recognizes this principle, “Reinforcing the common interests of the I-41 Corridor is the only way in which regional economic benefits can be realized. What are these common interests? Infrastructure improvements, talent attraction and business recruitment are stand out examples. Once the region’s residents appreciate the common challenges presented by a shared infrastructure and a regional workforce, collaboration becomes much easier.” As we seek to foster stronger collaboration and identity on a larger regional level we also open the economic ecosystem to new cross-sector innovation resources. A new university, a new industry, or a new technology may now become a more accessible partner in innovation.

MEETING THE CHALLENGE OF THE FUTURE AND A LOOK BACK

Thomas Friedman’s book Thank You for Being Late posits that the future is like a freight train coming at us with a speed and fury that we may not be prepared for. Technological advances, globalization and climate change will cause disruptions that we must be ready to deal with.

Yet he also observes, “More and more it is becoming clear the basic architecture of a resilient and prosperous 21st century must be a network of healthy communities.” In his opinion all healthy communities have created complex, adaptive coalitions based on trust to help foster resilience and propulsion for their citizens. They are leveraging local assets to create inclusive growth.

Friedman says, “The best adaptive coalitions start everyday by asking, ‘What world am I living in? How do I enhance the employability and productivity of my citizens and the inclusive growth of my community in this world?’.”

The Fox Cities and other Wisconsin metro areas have created some great trust and complex adaptive coalitions for projects in the past. But it now seems we are headed into a time where new levels of collaboration, cooperation and foresight are necessary.

Are we preparing for our economic future with the needed intensity? I am concerned that our region has enough people waking up every morning asking themselves Friedman’s question above, and have they been given the tools to accomplish their economic development goals?

I hope that some of the lessons learned from other regions and metro areas around the US included in this brief commentary may be helpful as we move forward to face the future.

In ending I would like to mention a local example of how cross-sector collaboration and innovation possibly changed the economic course of the Fox Cities region and beyond. In 1929, 20 of the local papermaking mills joined together to help found and fund the Institute of Paper Chemistry to be administered by Lawrence University. The paper companies realized the importance and need for new talent and jointly invested in a high-level Graduate program to supply the area with well-educated paper chemists. The many patents and innovations that emerged from the Institute between 1940-1990, supporting the development of new paper products, validated the difficult 1929 investment and insured that the Fox Cities papermakers would be at the cutting edge of their market’s technologies. The fortitude and long-term vision of these home-grown paper companies can be appreciated even more by realizing what was going on in the world in 1929. The Great Depression began mid-year and the Wall Street Crash was in October of 1929. Not the best time for a large-scale investment in a graduate program, but still the Institute survived and prospered at Lawrence until moving south in the late 1980’s.