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A Bright Future for Columbus, Ohio & The Midwest?

Walker Evans Walker Evans
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Over the past week, several news articles and editorials have been pointing toward positive trends taking place in the Midwest in terms of job growth and economic resurgence. Granted, many Midwest cities have hit an all time low point, so any small amount of growth is good news, but for a non-rustbelt city like Columbus, that hasn’t suffered quite as much during the economic recession, these regional trends could mean a whole lot more.

An article from ZDNet.com (“Detroit, Midwest lead in IT job growth“) provides a look at IT job statistics nationwide that paints a pretty positive picture of the Midwest. Columbus is #4 on the list with 57% growth over last year, with Detroit, Cincinnati and Cleveland topping the list. Pittsburgh and Chicago also make an appearance, helping the Midwest to dominate the Top 10.

“The fact that Midwestern cities lead the list of this month’s tech job growth areas reflects a resurgent economy that is lifting the region’s traditional manufacturing base,” said article author Joe McKendrick. “Silicon Valley also ranks 10th in terms of year-to-year growth, suggesting that IT opportunities are more geographically disperse than in previous times.”

An article from The Huffington Post (“Will The Midwest Become The Next Silicon Valley?“) showcases how several Midwest cities are leveraging their strengths to boost entrepreneurialism, attract venture capital, and grow new jobs. Ohio is mentioned multiple times as a state leading the way with public investment programs and the creation of business incubators.

“The rise of high-growth entrepreneurship and supportive ecosystems are not paint-by-numbers prescriptive,” says article author Ray Leach. “Just as Silicon Valley’s future was built on the promise of the semi-conductor industry, the Midwest’s radically disruptive innovations are being built on regional assets. And by playing to those strengths, the Midwest is enabling its rebirth.”

An article from New Geography (“America’s Biggest Brain Magnets“) provides a counterpoint to worrisome “brain drain” reports from the past five years, and lists Columbus as the 9th best city in the US in terms of recent gains of college educated people. The author of the article suggests that our nation’s “brains” are gravitating toward cities with more affordable housing and lifestyle opportunities.

“While the recession has taken a huge toll on the rest of Ohio, Columbus has been thriving, thanks to being home of the state capital, a booming startup culture and the largest college campus in the country,” said article author Joel Kotkin. “The city enjoys below-average unemployment and a strong tech presence.”

Do the trends mentioned in these three articles indicate that Columbus is on the right track for continued growth? Does this recognition indicate that our regional and economic development policies of the past five to ten years have helped to lay the groundwork for today? Does Columbus have enough of a solid foundation to stand out among our Midwestern peers, or are there things we need to be doing differently moving forward? Share your thoughts with us, below.

For more news and information on small business development and entrepreneurialism in Columbus, visit TheMetropreneur.com, or follow on Twitter or Facebook.

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9 Responses to A Bright Future for Columbus, Ohio & The Midwest?

  1. JonMyers February 13, 2011 1:08 pm at 1:08 pm

    Walker, I think both articles are in general, really positive articles that point to a bright future for specifically Columbus, which is an anomaly for the region. Chicago got lucky with having both 37 Signals there and Groupon, but in terms of the other larger cities in the region itself, I wouldn’t hold my breath.

    The “Next Silicon Valley” crap always ticks me off. You hear it a lot from leaders in the Midwest and of course it sounds good to write.

    The next SV mentality inadvertently highlights the challenge for the Midwest.

    At it’s core, what most people describe as Silicon Valley is an idea, a philosophy and a reflection of culture. I don’t see the culture of the Midewest being a magnate for the type of risk taking required to create industries in a way that’s analogous to the old SV.

    In terms of the business of Silicon Valley, if you look at the amount of venture capital that’s been in play in the last decade, about $150 – 200 Billion/ year (SV getting the lions share) versus $12 Billion in say a year like 1996, and if you look at the returns generated over the last decade (weak) it’s clear that it’s probably not the most promising paradigm to emulate to stimulate high growth and create industries.

    Thus, if the future is going to be bright for the Midwest, it’s probably better to think bigger, stop building products in the hopes of flipping them, build businesses and create industries.

    Being “the next Silicon Valley” won’t do that because it’s turned into a product building culture, not a business building/ industry building culture like it used to be. A lot of this is because the public markets are dead for startups.

    The notion of a next Silicon Valley parroted by many leaders suggests a lack of a mental model to be able to innovate. Thus, the leadership vacuum and cultural challenges keep me skeptical.

    Alright, enough of that tangent. Just some off the cuff thoughts.

  2. MichaelC
    MichaelC February 13, 2011 3:28 pm at 3:28 pm

    I think Jon makes terrific points with which it’s hard to disagree on a literal level. I wholeheartedly concur that the equation of that which this region is striving toward ought not be “the silicon valley,” but should instead be considerably more nuanced, for all the reasons Jon elucidates above.

    I’d offer the same thought regarding parallels that might be drawn between this region and the Research Triangle in North Carolina.

    That isn’t to say, however, that this region can’t have similar aims, just with a unique Midwestern…je ne sais quoi. But what we lack is what those areas didn’t: a coherent goal with a coherent strategy to get there.

    I’m unfamiliar with the development of both of the above regions, but my suspicion would be that it took time for SV and RT to devise a plan to get to where they’re at. Who’s to say we can’t do that given, given this region’s strengths and resources? Whatever it is, it will have its own identity, and perhaps is already on the cusp of developing. I lack Walker’s encyclopedic knowledge on Columbus’ economic development, so he can discuss this if he so chooses.

  3. JonMyers February 13, 2011 4:59 pm at 4:59 pm

    Thanks Michael. I’m not as familiar with the Research Triangle in NC, but that seems to be an interesting parallel, and a modest success story that is more relevant than being the next Silicon Valley.

    On another note, the focus on IT job creation numbers in the articles might also suggest a future vulnerability.

    Another thing I’d throw out there is the economic development thesis in the Midwest itself is fatally flawed. At least, what I’ve seen in Ohio. Especially from Ohio Democrats. They love to build economic development strategies around job creation and tout job creation numbers. I get the impression they feel that somehow these programs are exempt from the forces of the market domestically, and they can’t even seem to fathom the global competition they’re undoubtedly up against. At least in industries like GreenTech, which was mentioned in the article.

    Anyhow, unfortunately this fails to align with the incentive structures necessary to fuel follow-on (outside), scalable, connected private investment. It also fails to attract and fuel the efforts of the world’s brightest entrepreneurs when job creation is the centerpiece of these programs.

    Lastly, the focus on job creation will not be the catalyst for the transformation/ creation of industries, again because the incentive structure is out of line with the reality of markets and risk.

    That’s not to say job creation shouldn’t be a measure of success, but the timeline for measurement is typically way too short and other aspects baked into it are way off. This shouldn’t continue to be the centerpiece of every one of these programs. Especially when policymakers couple economic development programs with their own version of protectionism, which make matters even worse.

    I realize this all may sound extremely negative, but…. the upside is this.

    Entrepreneurship is alive and well in Columbus, and people are taking action with or without politicians. It’s never been cheaper to start your own business and again, people are taking action.

  4. Walker Evans
    Walker February 13, 2011 10:21 pm at 10:21 pm

    JonMyers Says: The “Next Silicon Valley” crap always ticks me off. You hear it a lot from leaders in the Midwest and of course it sounds good to write.

    Agreed. That sort of mindset does nothing to play to the strengths of our existing industries (retail, fashion, logistics, professional services, food service, etc) nor does it play to the strengths of our “human capital” (white collar workforce, large student base, entrepreneurial activity, etc).

    MichaelC Says: I’m unfamiliar with the development of both of the above regions, but my suspicion would be that it took time for SV and RT to devise a plan to get to where they’re at. Who’s to say we can’t do that given, given this region’s strengths and resources? Whatever it is, it will have its own identity, and perhaps is already on the cusp of developing. I lack Walker’s encyclopedic knowledge on Columbus’ economic development, so he can discuss this if he so chooses.

    Heh. I’m only semi-encyclopedic and a semi-good-googler on most topics. ;) Regional Economic Development over the past 5-10 years was handled through various efforts primarily spearheaded and executed by the Columbus Chamber, but also working with various partners at different levels.

    We’re in the midst of a ED transition though, as the new Columbus 2020 Initiative gets under way. This project is still very early on right now, but so far, the strategy is three-pronged:

    1. Attract new businesses to relocate to Central Ohio (traditional ED)
    2. Retain and assist existing companies in the region (traditional ED)
    3. Grow and foster a stronger entrepreneurial community (this is where I think things could get interesting)

    I’ve not seen where a specific tactics have been announced as of yet, but work is already under way. Columbus 2020 CEO Kenny McDonald (and others) are on a mission to India as we speak, and I believe focusing on Strategy #1 over there.

    JonMyers Says: I realize this all may sound extremely negative, but…. the upside is this. Entrepreneurship is alive and well in Columbus, and people are taking action with or without politicians. It’s never been cheaper to start your own business and again, people are taking action.

    Agreed. There’s always more than can be done to assist from the top-down, but that’s not stopping all of the exciting things going on right now in the local entrepreneurial realm. We wouldn’t have branched off a whole other website on that topic if we didn’t believe big things were happening right now. ;)

  5. ScottUlrich February 14, 2011 2:22 am at 2:22 am

    I think you all would enjoy this article about what they’ve done with “economic gardening” in Littleton, CO. Their main conclusions:
    1. Recruiting doesn’t work. It may draw headlines but it only makes up for a small (often less than five percent) of job creation in most local economies. (Plus, any company willing to be “recruited” is likely to leave eventually – it’s like dating a cheater, thinking he won’t cheat on you too.)
    2. Working with existing stable companies & trying to make them high-performance companies is a waste of time.
    3. Growing and fostering the entrepreneurial community is not only more likely to succeed at creating more jobs, but actually achieves the other two goals of attracting & retaining.

    The authors’ final thoughts:

    We by no means have solved the economic development riddle. We cannot patent it, put it in a jar and take it to any community and guarantee results. But we do think we are closing in on the answer. We think it involves slow, painstaking community development with an eye on the innovators. We think the gazelles are critical drivers. We think increasing connections and the flow of information helps and we think the greatest opportunity is during periods of chaos.
    We know [executives with Myers-Briggs temperaments Sensing-Thinking-Judging and Intuitive-Thinking-Judging] are important in high growth companies but so is temperament diversity (stability AND change). The “creative class” also fits in there somewhere. We know community development is economic development and a sound infrastructure is the starting point.
    We also know complexity science contends you can’t control or predict complex adaptive systems to any great degree. The goal is no longer control, it is adaptation through innovation. When organizations and local economies move toward the edge of chaos, adaptation and competition improve and the chances for survival improve. Hence, anything that increases the flow of information and ideas and anything that increases the number of connections is worth undertaking.
    In Littleton, we have moved from mechanical models to biological models to help us understand the nature of local economies and the businesses that inhabit them. After over a decade of very intensive experimentation, investigation and observation, we have come to a sobering conclusion: economies are massive biological organisms and not very amenable to control by anyone. Neither economic gardeners, nor economic recruiters nor politicians nor anyone else is running them. At best, we are adapting to everyone else’s adaptations.

  6. JB February 14, 2011 9:49 am at 9:49 am

    Jon, I just don’t follow your logic.

    Are you suggesting that the success of the Midwest is dependent on luck, i.e., Chicago ‘got lucky’ because Groupon and 37signals are both there?

    In that same vein, did Silicon Valley ‘get lucky’ with the Stanford Industrial Park and Xerox PARC? Or how about that research triangle – did North Carolina ‘get lucky’ with UNC, Duke, and NC State?

    Measuring regional success is a hard thing to do, and creating that success is even more difficult. Commentary about the Midwest being ‘fatally flawed’, backed with partisan political complaints, is pure silliness – and subtracts value from this discussion.

    Commentary about valid measures of success are great: I’m curious to know if the Midwest success can be measured by the dollar value of outside investment, or the number of industries created? And if this is a truly valid metric – how do we get that going?

    It’s my understanding that 40 years ago, the research triangle started from nothing. That region didn’t have the benefit of assets like OSU and Batelle.

    And I’d bet that no one in that region discussed the North Carolina area as being ‘fatally flawed’ – rather, the discussion was likely about valid measures of success and the hard work needed to make it happen.

  7. MichaelC
    MichaelC February 14, 2011 12:27 pm at 12:27 pm

    JB,

    RE: The Research Triangle, it has long benefited and continues to do so  from the highest concentration of PhDs in the world from nearby schools N.C. State, the University of North Carolina and Duke University.

  8. JonMyers February 14, 2011 12:54 pm at 12:54 pm

    JB, sorry I’m tied up today. I hope to give you some better answers soon. They’re are no right answers of course. These things are all experiments and to quote Einstein “doing the same thing over and over again and expecting different results is a sign of insanity”.

    I see the same things being done over and over, which don’t get the desired results.

    No I’m not suggesting luck was a factor.

    That said, I do believe there are alignments of many circumstances, which a few people (entrepreneurs) seem to see and most people don’t see. Entrepreneurs who see that alignment take action. Most don’t wait on government to do something.

    I wasn’t attempting to play partisan politics, but just pointing out the truth. The Midwestern Democratic party line with regards to economic development is stuck in the industrial age. The Republicans aren’t doing any better, but I hold Democrats in more contempt on this one because of the scope of the lie.

    To tie into Michael’s remarks and answer your question about metrics. Focus needs to be established first. I have lot of ideas on what measures might be relevant, but the metrics follow the focus. What is the focus?

  9. JohnDBaumgardner February 21, 2011 11:49 pm at 11:49 pm

    AWESOME ARTICLE ON THE CONTINUED SUCCESS IN THE MIDWEST …

    CLEVELAND IS WIDELY CONSIDERED TO BE “AMERICAS LATEST SUCCESS STORY … AFTER THIS LATEST 3 YEAR RECESSION”

    IT’S AMAZING WHAT HAS BEEN HAPPENING IN THE CITY 2 HOURS NORTH OF COLUMBUS …

    CLEVELAND IS UNDERGOING A COMPLETE TRANSFORMATION … BILLIONS UPON BILLIONS ARE BEING INVESTED IN LARGE SCALE PROJECTS THAT ARE TOTALLY CHANGING THE FACE OF THE CITY.

    A FEW FACTS ABOUT CLEVELAND …

    CLEVELAND HAS 10TH BEST ECONOMIC RECOVERY OF AMERICAS TOP 50 CITIES

    http://www.cleveland.com/business/index.ssf/2010/11/greater_clevelands_recovery_ra.html
    CLEVELAND RANKED AS HAVING 7TH BEST JOB MARKET IN THE US
    http://www.fox8.com/news/wjw-cleveland-job-market-ranks-7th-monster-com-ea-txt,0,4782264.story
    AND EVEN MORE GOOD NEWS …
    http://www.youtube.com/watch?v=mTBWCgtoWCo

    http://www.latimes.com/news/nationworld/nation/la-na-obama-cleveland-20110222,0,3758618,full.story
    http://www.youtube.com/watch?v=QgwVMf77fvE

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