Sunday, October 12th, 2008

Invert the World

“When I am weak, then I am strong” – II Corinthians 12:10

I’ve always struggled with SWOT analysis (strength, weaknesses, opportunities, and threats). It seems to me that most situations can be viewed in multiple dimensions. Or, as the well known philosophical proposition puts its, everything implies its opposite.

Consider the case of Eli Lilly in Indianapolis. It’s obviously a huge strength of the city to to have a major life sciences company headquartered there. Lilly money literally built the city. But Lilly is also, in a sense, a weakness. An anchor company like that provides stability and a base to build on, but as we know, an anchor holds you in place. Absent Lilly and other “legacy” employers in life sciences, what would the picture really look like for Indiana in that sector? Would the state be hungrier to build its life sciences industry if these jobs didn’t show up in the surveys, inflating the region’s true performance? Lilly is an opportunity as well. As the company pursues a Boeing-like “systems integrator” strategy where it no longer wants to be a traditional vertically integrated concern, there are big opportunities for Lilly spinoffs to turn into something, and for local services firms to start doing more business with Lilly. The Greenfield laboratory sale to Covance is a case in point. And of course, there are also threats around Lilly. Pharma is a maturing and consolidating sector. While Lilly has made smaller, opportunistic purchases, it has shunned the mega-deals that others have done. Lilly’s board clearly understands that most of these deals are not good for shareholders, and have decided to be wise stewards of their shareholders’ money. That doesn’t mean that they wouldn’t let some other dumb board of directors waste their shareholders’ money. If Lilly were acquired, it would certainly send shockwaves through the region, and I don’t think the city has a contingency or action plan for it.

So in many respects, things are what you make of them. Applying this to the Midwest, I always hear people whining and complaining about how we don’t have oceans, we don’t have mountains, the climate is terrible, it’s flat and boring, etc. Well, this might all be true. But is it a bad thing? Does it mean you can’t compete?

Try this thought experiement. Pick a smaller Midwestern city and exchange its population with that of San Francisco. What do you think the reactions would be. Here’s my bet on what the Midwesterners would say about San Francisco:

  • This place is terrible. It’s an earthquake zone for crying out loud. It costs twice as much to built things here because of that. It isn’t fair.
  • I hate it here. The terrain is so rugged. People today want pedestrian and bike friendly neighborhoods. We could never have that with all these hills.
  • Why did we have get stuck on the tip of this crappy peninsula? We’re isloated, there’s no room to expand, we’ve got all these bridge choke points, etc. This is killing our competitiveness.
  • The weather sucks here. It’s foggy all the time, it never gets warm, you need a jacket in August, etc.
  • Just our rotten luck, we’ve got the ocean, but it’s cold and their’s no good beaches. The winter is yucky and rainy.
  • Woe is us, we don’t have any water since the whole West is nothing but a gigantic semi-desert. Those jerks the Midwest have the Great Lakes, plus they get plenty of rain too. I can’t believe their luck.

Get the picture?

Try the experiment the other way. What would our friends from San Francisco think of the Midwest? What would they do to build social and built environments to take advantage of what the Midwest has to offer. Consider: the Netherlands is flatter than a pancake, but they managed to turn that into an advantage by creating the most bicycle friendly country in the world. And lest you think the Midwest climate prevents that, I’ll tell you that the Netherlands is famously rainy and not very warm to boot. I think our friends from out west might have a very different view of the Midwest from its current residents.

Yes, there are good hands of cards and bad hands of cards. But often it is just how you play them. The person who has the best hand doesn’t always win. Heck, a lot of time the person with the best hand folds and isn’t even in the game. That’s too many Midwestern places. They’ve already all but folded.

Yes, all things equal, I’d like sunny weather all the time too. Climate has definitely played a role in the migration from the north to the south and west. And beyond the physical environment the Midwest suffers from a host of legacy problems that are legitimate challenges. Nevertheless, I don’t think any of that is a reason the Midwest can’t compete.

We’ve got to invert the world. Stop looking at things from the traditional negative perspective. Start looking at them in a whole new way. Stand the problem on its head. How can we turn our perceived weaknesses into strengths? Why can’t we use flatness and open spaces to our advantage? Why not exploit centrality? Not in a superficial “60% of the US population is within an X hour drive” way but in a deeper, more structural way. Why can’t an agricultural legacy be a strength, particularly with the trends in local, organic, and environmentally friendly food production? There is no possible way to have environmentally friendly farming in California when the state’s entry agricultural complex is dependent on dams and irrigation. Similarly, what’s there in the manufacturing heritage? What about the people and culture? Start figuring out the way to make a liability into an asset.

I’m not going to offer the prescriptions here, but I do believe that much of changing the game for the Midwest is around changing the mindset. And looking at the region in a new and fresh way is a big part of that.

12 Comments
Topics: Strategic Planning

12 Responses to “Invert the World”

  1. Anonymous says:

    Couldn’t agree more, Aaron. Being a relative newcomer to the city, I’ve been struck by the insistence on negativity from many quarters. My hometown is Denver, where there’s more of a “can do” attitude (and a willingness to embrace the previously hated “cow town” image). Of course, I don’t want to make too much of this, because it appears there has been a positive attitude in many areas (especially sports, i.e., building the Dome before a tenant existed). Anyway, I really like the way you’ve framed the question.

    My .02.

    ProfDave

  2. Anonymous says:

    So Richard Longworth was right, it is a mindset issue.

  3. shouldhavezagged says:

    What a fantastic post! LOVE this kind of thinking. Aren’t we in a great spot for locally raised produce + meats, fantastic cycling, efficient public trans, beautiful greenspaces, and a thriving arts/music/restaurant culture?! We should really capitalize on all those things.

    How can we get this going? I’m in.

  4. Anonymous says:

    I don’t believe most of it for a second. People from San Francisco would hate it here in about 5 minutes flat. Given the option, I along with most people would live in SF in a hear beat.

    Havig worked at Lilly, AKA as the evil empire as many peope will tell you, has become a negative for Indianapolis and Indiana.

  5. de-bug says:

    Totally agree with our flatness being a great advantage for biking. I bike to work (towing my son to daycare) nearly year-round. If I lived in the hills of SF, that wouldn’t be possible!

    This Wednesday, Mayor Ballard is having a press conference to announce plans for Indy to become a Bike-Friendly city. (see info below). I’m curious to see what all is included and the timeframe for the implementation. The bike lanes on New York and Michigan were supposed to have been installed a couple of years ago….

    Indianapolis Mayor Ballard Press Conference
    Wednesday, October 15th 9:30 am
    Indianapolis to become Bicycle-Friendly City

    Date: Wednesday October 15 (see below for times of scheduled events)
    Location: Green space at Massachusetts Avenue and Michigan (across from the Athenaeum). In the event of inclement weather, the activities will be held inside the Athenaeum at the Rathskeller Restaurant.

  6. The Urbanophile says:

    Thanks for the comments everyone.

    anon 11:47, that’s an example of the negativity I’m talking about.

  7. Alon Levy says:

    Negativity doesn’t hurt when it’s realistic. New Yorkers love to bitch about the weather, the rats, the cockroaches, the unreliable subways, and the corrupt power brokers, all of which are driving people to Florida. New York still has enough economic prowess that it runs a $93 billion/year federal tax imbalance.

    You could say similar things about the Bay Area, which basically declared a moratorium on growth in the 1960s. The Overhead Wire is full of frustration at how even the most basic transit projects draw opposition in Berkeley. Still, as long as Stanford, Berkeley, and Silicon Valley industry keep innovating, the area will remain rich and desirable, and people will live in Central Valley exurbs just to work there.

    The problem with can-do boosterism is that it can burn out as soon as the circumstances that produced it end. In the 1920s’ Northeast, people really believed that growth would last forever and end all social problems, and embarked on ambitious construction projects that conformed to their vision of the future. Then came the Depression and that all ended; the railroads were left with unusable infrastructure to support, the skyscrapers stood empty, half the New York City subway was bankrupt, etc.

  8. Anonymous says:

    I am always amazed time and time again when people bash Indy..and in consistantly makes list like this.

    http://www.forbes.com/realestate/2008/10/10/cities-buck-economy-forbeslife-cx_ab_1010realestatebest_slide_9.html?thisSpeed=15000

  9. Alon Levy says:

    I wouldn’t trust the list too much. It assumes that everybody has a car and drives a constant number of miles, and everybody owns a home. In New York and California, home ownership rates are low, but rents aren’t much higher than in the rest of the country; in New York and Washington gas prices are high, but public transit provides a cheap transportation alternative.

  10. thundermutt says:

    I think you’re wrong about rents in NYC and California. They ARE higher than the rest of the country for comparable quarters, and have been for decades.

    Rents are always a function of capital costs and holding costs for housing…same issues as ownership. If ownership costs are high in one market compared to another, then so are rents.

  11. Alon Levy says:

    Rents in NYC are higher than in places like Houston, but not by that much. A two-bedroom in Queens or Jersey City rents for about as much as a two-bedroom in Houston, as far as I can tell by eyeballing classifieds. Manhattan is more expensive, but most people in New York don’t live in Manhattan.

    In general, very expensive markets seem to have low rent-to-price ratios, since people buy in order to invest in real estate as much as in order to rent properties out. My parents, who live in Monaco, pay about €8,000/month in rent for an apartment that sells for something like €5 million. It’s like a bubble condition, only it’s been going on continuously for a few decades.

  12. thundermutt says:

    alon, Monaco is like Manhattan: there are unique and desirable social features of the place, and there is no new land for development. Simple economics at work: there is considerable detachment from capital value of land and residential value of space. With the exception of The Loop, Midwestern cities don’t have that issue.

    As Urbanophile might encourage me to point out, living on a great flat plain has geospatial advantages. The basic argument holds: the spatial economics of Midwestern cities drives the relative affordability factor and always will.

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