Tuesday, November 25th, 2008

Miscellaneous Musings

The Kauffman Foundation Recently released their “2008 State New Economy Index“. Looking at the states which contain cities I normally cover in this blog, here’s where they stack up:

Rank State Chg From 2007 Chg From 2002
14 Minnesota -3 0
16 Illinois 0 3
17 Michigan 2 5
30 Ohio -1 3
33 Wisconsin -3 4
36 Indiana -5 -4
37 Missouri -2 -9
45 Kentucky 0 -3

Looks like a definite have/have not split, though I’m not sure if I’m at the low end of that I’d be eager to switch places with Michigan right now.

Among the variables included in the study are:

  • IT Professionals
  • Workforce Education
  • Migration of US Knowledge Workers
  • Foreign Direct Investment
  • Fastest Growing Firms

One a more specific note, I was forwarded a link to this article which discussed a specific life sciences metric. This is patent activity in the medical device area. There are two measures: quantity and quality. The Midwest has a few entries on both lists.

On the quantity list, they are:

  • #1 – Minneapolis-St. Paul
  • #8 – Chicago

On the quality list, the are:

  • #3 – Columbus
  • #7 – Minneapolis-St. Paul
  • #10 – Kansas City

One of the nice things about city benchmarking studies is that other cities than the sponsor can learn from them. Here’s a great, very readable quarterly summary out of Pittsburgh that includes most of the cities I look at here. It’s definitely worth a look.

On an arts and culture note, the Times of London notes a Grammophone magazine survey of the world’s best orchestras. The Chicago Symphony is tops in the United States and #5 all around in the world ratings. The Cleveland Orchestra comes in second in the US, #7 overall.

Not all plant relocations to the South are driven by market forces. They are aggressive about incentives there. Here is a partial list of the incentives given to VW by Tennessee:

  • 30 year tax abatement, with tax value of the property set at $10 million
  • Free land and free site prep
  • Waiver of inventory taxes, sales and use taxes, and a guarantee of $40 million in relocation tax credits. All company owned vehicles to be exempt from tax.
  • $24 million for job training
  • $2 million for public relations for the project
  • Pay for 50% of the cost of a welcome center.
  • Integrate German into the local school curriculum.

Apparently the list goes on for 49 pages.

The Ohio DOT has released a balanced scoring methodology for assessing projects. The intent appears to be to create an objective way to compare projects. However, this looks similar to the INDOT IPOC guidelines from the pre-Toll Road lease project analysis. While this sort of scoring looks good on paper, I’m not convinced it truly leads to the desired outcomes. Also, I note total traffic volume is missing as a weighting factor.

Chicago. The light at the end of the tunnel of the three track restrictions on the north main L line is upon us as the CTA opens all tracks to service at Fullerton. Belmont is scheduled to wrap up by the end of the year.

An article on the parking crunch at some suburban Metra stations. Some of them have a nine year waiting list for parking permits.

The airlines serving O’Hare are asking for a delay or scaleback of the modernization program there.

The Tollway Authority is going to create “high occupancy toll” lanes.

The financial crisis is putting the CTA’s sale-leaseback of the Green Line L in jeopardy. Service might even be forced to be suspended on the line.

The NYT ponders the impact of an Obama presidency on Chicago. So does The Economist.

Columbus. The city wants to tackle retail vacancies on High St.

The city is getting ready to kick off $28 million in trail improvements, thanks to a bond issue approved by the voters.

A tale of two arenas.

Cleveland. Some in Cleveland are pointing to Pittsburgh as a model.

Detroit. The newly re-opend DIA is packing them in.

Southeast Michigan is bracing for a crash.

Indianapolis. A citizen group effort to look at the future of Broad Ripple. My view: a lack of parking is a sign of urban health, not a problem. There’s plenty of city neighborhoods that would kill for that. There’s an argument to be made for increased city investment in the area, particularly in rethinking the upcoming Broad Ripple Ave. reconstruction project, which appears very subpar. However, the city needs to be able to harvest an ROI on its investments, meaning neighborhoods need to be willing to step up and embrace increased development intensity, something many people don’t want. Without that, it’s not worth the city’s money.

Coverage of intermodal service at Avon Yard.

Kansas City. The new Paseo bridge (IIRC a $250 million) won’t include any multi-modal facilities such as a bike lane.

Louisville. The city is going to furlough workers for three days to close a budget gap.

Twin Cities. Neiman Marcus decides to stay put in downtown Minneapolis. Still, the downtown retail market is struggling with many closings in the last few years.

Note: Happy Thanksgiving everybody – I’ll be back next week.

Sunday, November 23rd, 2008

Detroit: Do the Collapse

I enjoy swapping “war stories” about work as much as the next guy. I’ve heard a lot, but some of the most incredulous came from a college buddy who used to work for General Motors. He was a manager level employee in field operations, but was often called in to work auto shows and the like. What was his job at the auto show you might ask? Well, at one Chicago Auto Show, his first responsibility was to make sure the hotel room for the executive was prepped correctly. This exec had very specific detailed requirements as to the brands of soft drinks, liquor, chocolates and cigars that needed to be on hand when he arrived, so it was my friend’s job to make sure this happened. After that, he got his company Escalade and went to O’Hare to pick up said exec’s wife, whom he then spent much of the afternoon ferrying around on a Michigan Ave. shopping trip.

There’s a lot more in this vein, but that should give you a flavor of the auto industry. Even if you assume a lot of this is exaggerated for effect or outright BS, I’ve heard so many similar type things from people who’ve been associated with the auto industry that there must be a kernel of truth in it somewhere.

I lead with this because it is so common to blame the UAW and its $73/hour or some such wage packages for the problems facing the Big Three. And indeed in the modern era that is not sustainable. But there has been particularly little focus on the management excesses of the auto industry, and the corporate cultures of those companies, and by analogy that of Detroit.

Detroit represents the American urban decline story in its purest form. The Detroit region and indeed the whole state of Michigan is in serious trouble. Of all the cities of the Midwest that are are struggling, I think it has one of the toughest roads ahead. It it is fighting terrible structural problems that hobble its ability to compete. The linkage of its fortunes and its public image to automobiles is of course a big problem. The auto industry not only brings many image stigmas, it is also an industry that is undergoing a painful restructuring. Until that restructuring is complete, the city and state can never recover.

The model here is Pittsburgh, which, with the disappearance of the steel industry in the 70’s and 80’s underwent a civic catastrophe the likes of which few places have ever seen absent being overrun in war. Today, while Pittsburgh still has serious problems, it seems to have hit the inflection point and many of the indicators for that city are now positive. I think there’s a powerful lesson there. Until Detroit hits what traders call the point of “capitulation”, there’s little chance of the city reversing its fortunes. That’s a painful reality. The auto industry and the city and state must work through their restructuring before things can turn positive.

Beyond the auto-industry dependence and branding, Detroit also famously suffers some of the worst racial polarization in America. Moreso that most Midwest cities, Detroit has a rich black cultural heritage, and it already has a powerful image in the public mind as a black city. Those who know me know that I think that there is a big opportunity for Midwestern cities to put their black communities at the center of their civic growth strategy. I’m astounded almost no one has done this. Just look at what having a robust and engaged black community in Chicago has done for that city. Without that robust black infrastructure, no President Barack Obama from Chicago in the White House. The problem for Detroit is while it has great assets in this regard such as its Motown music legacy, the racial polarization of the region vitiates them. Healing that divide is critical to the future success of the city. The antics of Kwame Kilpatrick, the disgraced and jailed former mayor of the city, only adds to the problem by reinforcing stereotypes. He also illustrates the feckless leadership in the city proper.

But there’s another structural problem as well, one that is not often remarked upon or considered. Namely, Detroit is just plain too big. With a metro area population of 4.4 million (effectively even higher since Canada isn’t included), Detroit is the second largest metro in the Midwest by a good margin and one of the largest cities in the country. This creates a gigantic mouth to feed. And it makes it just incredibly difficult to turn the ship around. Detroit and the state of Michigan (and Ohio) are the size they are because large volumes of unskilled labor were needed in their factories. Without those factories, the need for the people evaporates. There is simply no raison d’etre for a city the size of Detroit in Michigan today. One reason Indiana is faring much better than Michigan and Ohio despite having lower educational attainment levels and a higher dependence on manufacturing is that it is half the size of those states. This makes its problems much more tractable. One of the biggest problems facing Michigan and Ohio is simply the sheer size of those places. (Illinois is big too, but its population is heavily concentrated in Chicago, which creates a different dynamic).

Any realistic plan for tackling the challenges has to face up to these structural dynamics and put together a strategy for addressing them. Unfortunatley, that hasn’t been a hallmark of local thinking. This isn’t limited to Detroit. I see it repeated in so many similar places. No one wants to admit that their glory days are behind them, that their future is dimmer than their past. That’s not the American way. It’s not the type of forward thinking optimism that we’re used to in this country. But for any number of cities, Detroit being one of them, dealing with the present involve acknowledging that you can never recapture the past.

This is antithetical to how civic leaders are trained to think. Indeed, we see lots of the same types of programs in Michigan and Detroit that we see in every state. Lots of talk about assets, lots of marketing and hype, some small victories – new companies, new jobs, a big research grant, etc – but ultimately not enough to move the needle. I don’t want to lecture too much here. I realize this is a hard and painful thing.

There’s an organization called Detroit Renaissance that appears to be a primarily corporate vehicle for trying to renew Detroit. I actually happen to think they’ve got some good ideas. They have a podcast series called “50 CEO’s on the D”, which is where the CEO’s of the 50 companies that are behind this come in and talk about some aspect of the city and why it is great. One of the things that always comes through for me is how much these people love Detroit and are passionate about the city. I’ve seen it in others as well, even those who left. A friend of mine in Chicago who grew up in Grosse Pointe still talks about how much she wants Detroit to succeed and how much she still cares about it. So there is a reservoir of deep feelings about Detroit. But what that does is often to cause people to not be able to realistically evaluate the situation and instead adopt a “failure is not an option” approach and say that Detroit and Michigan is going to be the next new hip place or the big center of some brand new innovative industry. But the reality is that Detroit is poorly placed to achieve this and it would be better served to adopt strategies designed to slowly bringing the city back to health, even if that means abandoning these super-sky-high ambitions for the time being.

The recipe for Detroit and Michigan is something like this:

  • Complete restructuring of the auto industry
  • Heal the racial divisions
  • Adopt an active shrinkage strategy to reduce the population of the city and state
  • Adopt a regional hub strategy with Grand Rapids as the focus of western Michigan and Detroit as the hub of the east.
  • Continue the good things that are being done on tourism, which can be an ever increasing industry along the Great Lakes and in the north and UP. This is already being done.
  • Restructure state government to be more business friendly, lower tax, and lower cost.
  • Continue to seek to leverage the economic development potential of U of M and State. This is already being done.
  • Create realistic sector specific approaches where Detroit and Michigan are well suited to compete.

This is going to be painful. But it is going to be painful regardless of what anyone does. The restructuring of the auto industry is going to happen. It’s only a matter of how long and painful it will be.

Regarding restructuring, the auto manufacturers are in denial. GM says bankruptcy is not an option. I’ve got news for GM, bankruptcy is the only option. It is physically impossible to restructure the domestic car manufacturers without it. Among other things, restructuring implies rationalizing dealer networks, something that illegal under state franchise laws passed by legislatures that are in the dealers’ back pockets.

I’ve seen estimates that 2-3 million jobs could be lost and that chaos would ensue if the auto makers went bankrupt. That’s probably true if GM, Ford, and Chrysler just waltz down to the court house and file. But it is not the case if they have a government sponsored, pre-packaged bankruptcy. Still, I think it is likely a very large number of jobs are going to be shed across the automotive value chain. Possibly a million or more.

This is a terrifying number to contemplate. But it has to happen and it will happen. It is just a matter of how long it takes to get there. Eventually market forces will drive it. The domestic auto sector simply employs far too many people. The future of the auto industry looks a lot like the steel industry: continued large production volumes, but with a significantly smaller labor force and market based pay and benefit packages. Notably, every US steelmaker except USX went bankrupt.

I’ve been involved in a lot of conversations and listened to presentations on the auto crisis, and there is remarkable consensus among the people I’ve talked to on what should be done. It centers around a government backed, special purpose, pre-packaged bankruptcy that accomplishes the following:

  1. Capital restructuring. All equity and junior debt holders are wiped out. Senior debt holders are forced into a debt-equity swap. The auto makers should emerge from bankruptcy relatively debt-free.
  2. Strategic restructuring. The domestic auto makers have too many models and too many brands. They should dramatically reduce these. Focus on building one great car instead of “brand engineering” to rebadge the same car multiple times. This involves a significant reduction in the quantity of dealerships.
  3. Re-evaluation of the survival of a standalone Chrysler. Perhaps the healthy Jeep, mini-van, and Ram truck franchises could be sold off and the rest of the company wound down.
  4. An infusion of outside management talent. I’m not saying you have to decapitate the leadership of these companies. But I think Alan Mulally has shown that you can bring in an outsider who can make a huge difference. That guy is the biggest reason that Ford is in the best shape right now. He’s done amazing things. Had Ford brough him in 10-15 years ago, the industry might be in a different position today. If Congress forces Mulally out, it would be a tragedy. There is an incredible solipsism in the auto industry. Even one of its fiercest critics, the amazingly awesome Peter DeLorenzo at autoextremist.com, has drunk the kool-aid on this one. He says the auto industry is unlike any other in the world. This implicitly seems to argue that only an insider can run a car company, but Mulally is proving it doesn’t have to be that way. (I know DeLorenzo loves Mulally). The reality is that the auto industry needs to be a lot less unique and a lot more like any other major industrial concern. Boeing and GE have long lead times, etc. in many of their businesses and have done very well. The auto makers need to recruit – potentially with a dose of patriotic arm twisting from President Obama – absolute top talent to see through the restructuring: strategic talent, operational talent, financial talent, organizational talent, etc. Again, this isn’t a wholesale purge of the current management, but an influsion of new blood is clearly needed.
  5. A massive change in the corporate cultures. This is the hardest to change, frankly. But arguably it is the most important for achieving lasting success. The culture of perks and hierarchy, of having to make sure you listed the names in the right order on an internal memo, has just got to go.
  6. Labor force restructuring. All future pension accruals to be terminated and replaced with 401(k)’s, termination of retiree health benefits, elimination of the jobs bank, required employment levels, and restrictive work rules. Everyone is put into the lower scale in the existing two-tier wage structure agreements.
  7. Federal assistance. The feds have a key role to play. One, in guaranteeing the ongoing operations of the company and providing DIP financing during bankruptcy. It also needs to federalize the auto-business by using its interstate commerce powers to blow away state franchise laws and other restrictions on auto operating practices such as bans on direct sales. The most important role for the federal government is to provide transitional assistance to people affected by the radical labor changes above. Someone who took early retirement at 55 in the good faith belief that they had health insurance should not be left out in the cold. The feds should extend Medicare or a similar type of health coverage is available to those who need it. Not gold plated you don’t pay a dime for anything coverage, but solid, quality health coverage. Similarly, through the PBGC, the feds should be sure no one take a huge writedown on their vested pensions. And there should be assistance to older workers who would be adversely affected by the switch from defined benefit to defined contribution plans. And the feds should provide job training and other educational opportunities to those displaces, as well as relocation assistance (see below). These programs should apply to the entire value chain, not just the OEM’s.

This sounds straight forward but it is a clinical description of what amounts to dropping a nuclear bomb on the industry. It sounds simple, but the human toll is going to be terrible. Again, that toll is coming regardless of whether this plan is adopted or not. Even if the feds just hand the companies funds to get through the crisis, that only delays the day of reckoning. For many older workers, that might be just fine with them. Part of the problem is that there is a perverse incentive whereby older workers are made not to care about the long term future of the company. If they just hang on long enough to make it to retirement with full benefits, even if that means GM long term fails, that may be personally beneficial for them. I’m not saying people are out there promoting it, but there are game theory reasons to believe this might be an incentive.

If one thing has been made clear by this auto crisis it is that the nation has lost its sympathy for Detroit, and even for labor. I know that particularly baffles the UAW. But it is understanable. Once the UAW could be seen as the vanguard of labor rights. What the UAW got for its members, the rest of American labor might hope to see themselves one day. Today, nobody believes that. Instead, the UAW is the defender of the last bastion of entrenched labor privilege. They are indeed a labor aristocracy. This is why they are no longer loved.

Even so, we can’t lose track of the fact that there are real human beings, labor and management, with real trauma in their lives. Even if they are at least partially to blame for the mess they are in, that doesn’t mean they deserve what they are getting. It’s like a Greek tragedy: the suffering is disproportionate to the crime. And there but for the grace of God go you and I. I also work in a restructuring industry, and may yet join the auto workers in their pain.

The stories you hear in the Detroit papers are heartbreaking. One that really stuck with me was about people losing their life’s possessions when they couldn’t pay the rental fees on storage lockers. People who had already lost their homes to foreclosure put their possessions in storage, only to lose them too as the storage companies auctioned them to pay the bills. I’m not an emotional guy, but this makes me sick to my stomach. I don’t know about you, but I don’t think this should be happening in a country like America. People who made decisions in good faith, who showed up to work every day, who did the right things to care for their families, shouldn’t be left to lose everything because of the action of economic forces they can’t understand or control. Not in America. That’s why we absolutely need a federal safety net program here. Michigan alone can’t fund this.

Which brings us to the next point: urban shrinkage. Just like the auto manufacturers themselves, Detroit and Michigan need to get smaller, a lot smaller. It doesn’t help to retrain people for different jobs if there aren’t any jobs to be had. In my view the biggest piece of assistance that the federal government can give is relocation assistance. Help people sell their homes – buy it from them if you have to – and give them enough money and support to get re-established in a different part of the country where there are better economic opportunities. I know this sounds radical and heretical, but shrinkage has to be part of the puzzle, especially for Michigan and Ohio. It’s already happening naturally. Detroit has net outmigraton of 58,000 people per year. If this were tripled, in 10-15 years the population could start getting reduced to something more manageable. Detroit would be much better off with a popoulation of 2.5-3 million instead of 4.4 million. I don’t think it will get that far, but some shrinkage is key. Without it, the chronically unemployed will be a huge loss to the state, and also the inability to find meaningful employment will rob the people themselves of their dignity and potential.

I can’t say I fully endorse this yet, since I haven’t thought through the implications or how exactly it would work, but I think the federal government needs to step up with a major “controlled shrinkage” program for the greater Rust Belt. This is really embracing the Youngstown strategy at scale, with serious federal money behind it. It will be politically challeging if not impossible. But since I’m just a blogger, I can at least put the idea forward.

Cities need to be categorized. Some, like Columbus and Kansas City, are doing well and can be invested in as growth cities. Others, like Cincinnati, are below national average in growth, but are growing. They need different strategies. And many places are struggling, Detroit, Cleveland, and especially many of the smaller industrial cities, and an active shrinkage program should be put in place to put them on a sustainable base. This involves abandoning the pretense that these cities will become thriving urban meccas on par with the Charlottes and Austins and Denvers of this world. It means active relocation assistance to help people resettle elsewhere. It means funds to acquire land and “decommission” parts of the urban fabric. This is what Youngstown is trying to do by actively encouraging people to leave certain areas, with plans to rip out the infrastructure later. Perhaps large portion of the city of Detroit could be turned into nature reserves in this way. (Google “urban prairie”). And there would be significant investment in brownfield cleanup. Infrastructure funds are targeted at renewal in select areas, not in capacity expansion for growth or for some type of large scale urban transformation.

In terms of government restructuring, Michigan needs federal assistance to fund its industrial transition. But it needs to adopt a more business friendly approach, and find ways to lower the cost of doing business. One other radical idea: why not a mass commutation of the sentences of certain types of non-violent offenders in the prison system, such as those convicted for minor drug possession? Michigan spends more on prisons that most states. It spends more on prisons than it does on education. No state can survive like that. While violent criminals surely need to be locked up, can the state afford to lock up everyone else? Changes to sentencing and prosecution can make this change permanent over the longer term. In the shorter term, some type of controlled release program might be better. There’d possibly be a short term uptick in spending to fund probation officers, drug and alcohol treatment, etc, but in the long term corrections spending would decline.

As for Detroit sector specific industries, there are many possibilities:

  • Clearly, automotive R&D will continue to be big. The auto industry is not going away in Detroit.
  • Music. Detroit has one of the strongest legacies of music of any city in America, from Motown, to electronica, to hip-hop. Many popular acts have come from Detroit. But I don’t think Detroit has figured out how to monetize this. Nashville figured it out. Detroit also needs to figure it out, though I won’t pretend this is easy.
  • The Detroit Renaissance Aerotropolis plan is a very good one. Detroit has a fabulous airport. They need to aggressively defend their hub (which admittedly the shrinkage strategy is harmful to), and look to develop airport related industries.
  • Being the entry port for cross-border traffic to Canada. A huge portion of the goods that flow between the US and Canada go through Detroit. Significant infrastructure spending can be directed to relieving bottlenecks. How can Detroit monetize this?
  • What commercial potential could come out of Ann Arbor?

There have to be a few others out there. I do not believe chasing the same creative class/biotech dream as everyone else is going to work for Detroit. Certainly not enough to really change the game there.

For the other items, talking about Grand Rapids as a hub is beyond the scope of this already too long post, but clearly large cities are the entities best positioned to compete the global economy. The state should concentrate its resources where it has a chance to win. Tourism is a no brainer. Michigan is already a great tourist destination. As for improving race relations, honestly, I won’t profess to have the answers on that one. It is one of the great challenges bedeviling our country.

Perhaps my ideas sound radical. And indeed they might not be right to implement. But they are certainly ideas that should be explored. Radical problems often call for radial solutions. And with eight straight years of recession, Michigan can’t afford to be taking any options off the table.

There is a lot of good reading out there on Detroit. I mentioned Detroit Renaissance earlier.

Here is a report called Roadmap to Michigan’s Future by a group called the Millenium Project at the University of Michigan. Not surprisingly, investing in education is high on their list. Clearly, this needs to be a focus in Michigan, but my view is this report envisions too sharp a pivot for the state. This is the “we will dramatically transform ourself into knowledge economy” ambition that I think is probably a bridge too far for the state until the restructuring I mentioned is completed. Still, good ideas that should probably be pursued in parallel.

There’s another organization called Michigan Future. They published a very interesting report called A New Agenda for a New Michigan. It is also of the dramatic transformation variety.

I’ll also note the New Economy Initiative. This is a $100 million fund to help transform southeast Michigan. It helps fund Detroit Renaissance among other things. They don’t seem to write reports themselves, but it is notable that John Austin of the University of Michigan and the Brookings Institution, is the director.

One of my favorite reads is Detroit News columnist Daniel Howes. He’s pretty good at calling it like it is in Michigan, though like DeLorenzo, he backs the bailout.

Also in the Detroit News recently, “Michigan asks What’s Next?” And the editorial board begs for a bailout.

Here’s an example of what I mean on changing the ambition level. Detroit wants to build a big rail transit system. This is a variation on “silver bullet” thinking where Detroit will build light rail on Woodward and suddely life will be pumped into the city. It’s possible I guess. But while that strategy might be appropriate for higher growth locations like Columbus, I don’t think it is where declining cities like Detroit need to be spending their money. Detroit has much higher priority needs than this.

Coverage on the auto crisis from the Chicago Tribune.

Lastly, there is no better source of information about the automobile industry than the aforementioned autoextremist.com. It more than lives up to its billing as “the bare-knuckled, unvarinshed, high-octane truth.”

Friday, November 21st, 2008

Kris Kimel Gets It

Is there something in the water in Louisville? For some reason, it continues to attract a core group of innovators and creators who operate at the absolute highest level in the world.

One of the things this has produced for the city is the IdeaFestival, a major international event attracting top international talent across a wide range of disciplines. To keep the excitement going year around, they publish an IdeaFestival blog. A recent article included a video featuring Kris Kimel, who founded the festival. This guy shows in about two and a half minutes exactly the way that cities need to be thinking in order to thrive in the 21st century economy. Among his points:

  • He wanted the IdeaFestival to be the “preemient event in the world for convergent innovation”, covering the intersection of science, business, the arts, design, and philosophy.
  • He wanted to use it as a vehicle to extend the brand of Kentucky and Louisville into the innovation space. His vision was that when people on the streets in LA, Paris, or Banaglore ran into each other and asked “Are you going to be in Louisville this fall?” they’d associate it with the IdeaFestival. That the conference would have a brand recognition in its space similar to Sundance in film.

The IdeaFestival has gone a long way towards achieving that vision, though I don’t know how much it has really changed the city’s brand image. That takes more than a conference. It takes output. That’s one reason I’m so sad to see Museum Plaza dead. But that sort of change is a longer term game.

What does this illustrate? A couple things. Firstly, you never achieve great things unless you aspire to achieve great things. Setting a lofty objective like “being the preeminent event in the world” can inspire and motivate people in a way that mediocrity never will. Just putting on another ho-hum conference wouldn’t have amounted to anything. Also, Kimel didn’t spend his time saying, “Gosh, I wonder if lil’ ol’ Louisville can do something like this.” Rather, he said, why not us?

Successful cities out there in the US and the world have a healthy amour-propre. It takes a certain degree of self-regard to muster the will to compete in the world. The Midwest has long been an understated, modest sort of place. That has its charms, but the whole “nail that sticks up gets pounded back down” routine is not good enough anymore to make it in the 21st century. The IdeaFestival shows that when smaller Midwestern or Southern cities decide they want to compete out there in the 21st century realm of ideas, they can actually do it and be successful. This is an example for other cities and other innovators to emulate.

You can watch the full video here:

Wednesday, November 19th, 2008

Indy’s Increasing International Population

Guess which city is growing its foreign born population at a faster rate than Chicago? That’s right, it’s Indianapolis. Now it is easy to get a high rate on a low base, but as with population, jobs, and other stats, Indy is leading the pack in the Midwest in terms of an increase in its foreign born population. And that is reason to celebrate locally. This was discussed in a major article in Sunday’s Indianapolis Star. (There are plenty of companion articles linked off the main one, so don’t miss them).

The foreign born population of the Indianapolis area is up 69% since 2000, to about 100,000 people. My math says this is about 40,000 people added in the last few years. This outdistances regional peers like Louisville, Cincy, Cleveland, Milwaukee and St. Louis, and beats even Chicago and Detroit. Indy’s not a truly polyglot city by any means, but it is definitely getting more diverse. The Midwest challenge now is to bring other similar sized cities up as well while Indy keeps improving its own game.

This superior performance in immigration is clearly linked to the city’s economic out performance. Jobs attract immigrants. Immigrants attract jobs. And in the process, these newcomers are transforming the city in a positive way. Imagine what the state of Lafayette Rd. and West 38th St. would be without all of the ethnic businesses there. Clearly the immigrant communities have already done a huge service to Indianapolis by pumping life into this failing retail zone.

You don’t yet feel the change in the city’s demographics on the streets of downtown. But that’s not unusual these days. The way immigrants settle in the 21st century is different than it was in the 19th. Even in places like Seattle, it’s become a truism that if you want good ethnic food, you need to head to the suburbs. So it is with Indy as well, though many of those “suburbs” are the older suburban areas of Marion County.

The really good news here is that this is a very diverse immigrant population. It’s not just Latino. There are 26,000 Asians and 10,500 Africans as well. The Indian population has doubled to 6,000. The Pakistani and Nigerian populations have tripled to hit 1,000. There are close to 1,500 Burmese. There are about 5,600 Chinese. Even among Latinos, the city is not monolithically Mexican. There are many Central American nationalities represented, for example. In Pike Township Schools alone, children speak 74 languages from 63 countries.

Why is this level of diversity good? First, these immigrants bring a diversity of skill sets with them. And it boosts the number of types of ethnic retail offerings out there, a boon to those non-immigrants who might be interested in the product. But most importantly, what draws immigrants is other immigrants – friends, countrymen, etc. The more communities that exist locally, the more groups that can be leveraged to attract others. If I were the city, what I’d encourage these various immigrant groups to do is tell all their friends about Indy. The most important thing these new arrivals can do is bring a bunch of their fellows along with them. The war for talent is fierce, and other cities are fighting hard to lure immigrants.

The cloud on the horizon is that immigration appears to have slowed after 2006. In part this may be a reaction to the economy, and thus prove a short term blip. But it is a bit worrying.

To pivot in a totally different direction, and one I normally stay away from since it smacks of the political, this article really highlighted to me one of the elephants in the room of Indianapolis: the incredible lack of official recognition given to gays and lesbians.

Gov. Daniels took time out of his busy schedule to pay a visit to a local Sikh temple. Mayor Ballard served as the grand marshal of a cultural parade in the Lafayette Square area and has a department of international affairs. But have either of these two shown up at Indy Pride? Lest we think this is a partisan affair, Mayor Peterson never put in an appearance either, IIRC. Supposedly he sent some letter in his stead, but that’s virtually no gesture at all. Again IIRC, Gov. O’Bannon likewise did nothing.

I think it is fair to say that there are more gays and lesbians in Indianapolis than there are Sikhs or Chinese. The figures I’ve seen put the local gay and lesbian population at between 4-5% of the local population, which is comparable to the total foreign born numbers above. But where is the official recognition? Where is the mayor or the governor on this one?

I’m no Floridian. I don’t suggest that gaydar be added to the metro index of leading economic indicators. Creativity and tolerance are clearly very important in a city’s success, but they are only two values among many that go into a successful city. Yet when you consider how invisible Indy’s robust gay and lesbian population is, it’s troubling.

Indy is doing well, and out performing most of the rest of the Midwest. But its growth badly trails national growth leaders like Charlotte and Austin. And IMO the city has not yet reached the point where it has a self-sustaining critical mass for the new economy. It’s not inconceivable that Marion County could ultimately implode, taking the region and probably the state with it. The city and region need to be firing on all cylinders. It is going to take everything the place has got to put it over the top. That means immigrants of all stripes, gays and lesbians, African Americans, life sciences, motorsports, conventions, a new airport, high tech, distribution, traditional white Hoosier families, religious people, advanced manufacturing, non-profits, arts and culture, and things we probably haven’t even thought of yet. The city needs everything and everyone. Slighting the gay and lesbian population is like trying fight with one hand tied behind your back. The places that don’t make this mistake are going to have a big advantage.

So I’m going to encourage the governor and mayor to use some the political courage that they’ve shown they have to step up to the plate, and bring the same level of official recognition to the city’s LGBT community that they have to the various immigrant groups that now call Indianapolis home. No one is asking for a personal endorsement of a lifestyle politicians might disagree with. But when you are the chief executive of a government, your duty is to all citizens, not just those who share your personal views. And I think the public ultimately get it on that point. I don’t think anyone believes Gov. Daniels is about to covert to Sikhism just because he showed up at that temple, for example.

If you are the mayor and the governor, why not ask to serve as co-grand marshals of Indy Pride 2009? There is probably nothing that would cost so little that would do so much for the city’s image. As much as any new airport terminal or sports stadium, this is how you send a signal about being a real 21st century city.

Bonus Transit News

Christopher Lineberger had an op-ed in the Star this week exhorting the city to implement transit. While I’m certainly a fan of better transit for Indy, this op-ed did not make an effective case for it, relying on traditional but weak arguments. Consider:

1. He never once talks about transit in terms of mobility for riders. It’s all about changing urban development patterns. Clearly, transit is something he sees as a means to an end, not anything with inherent value itself. But if you don’t create a compelling mobility solution that gets people where they want to go in a manner that is competitive with alternatives in terms of cost, end to end journey time, and quality of experience, people aren’t going to ride.

2. He gives the “brain drain” rationale. “Ever wonder why so many of your young adults move to Chicago? If you do not build what the rising generation wants, it will leave or not be attracted to Indianapolis in the first place. Losing young adults also will hurt the economy if people in their most entrepreneurial time of life go elsewhere to start new businesses.” As I’ve said before, the entire concept of brain drain is flawed. The real challenge facing places like Indianapolis is not retaining home grown talent. Chicago didn’t get to be Chicago by keeping its talent at home. It did it by hoovering up everybody else’s talent. I’ve yet to see any Midwestern city outside of a tiny handful like Chicago that even dreams that someone without a pre-existing connection to the city might want to live there. But as with the immigrant example, that’s what it really takes to succeed. You have to get people to choose to move to your city for reasons apart from an existing connection or a too good to pass up job opportunity. Then they’ll bring their friends and family along with them. Indy has to find a way to do for domestic talent what it is doing for immigrants.

3. The idea that Indy will be a competitive city with Chicago in terms of urban walkable neighborhoods if it builds rail transit, and that this will cause people to choose to live there instead of Chicago, is not realistic. By any measure, no matter what Indy does, it will never match Chicago’s dense, transit oriented, walkable neighborhoods. In fact, Indy is among the more poorly positioned Midwest cities to even try because it is among the lowest density. Unlike say Cincinnati, it never had dense urban neighborhoods to rival Chicago, even in its urban heyday.

You simply cannot compete against an entrenched competitor by taking them on at their strongest point head on. Saying that you’ll take Chicago on by trying to out transit them and out walkable neighborhood them is to decide to fight the battle on Chicago’s terms. That’s a losing strategy. Rather, you’ve got to put out a differentiated offering that is unique to you and let Chicago try to beat you at your game. Indianapolis will never be Chicago. But you know what, Chicago will never be Indianapolis either. Great cities, like great wines, have to express their terroir. To be a world class city, Indy has to first and foremost be a world class Indianapolis, not a wannbe Chicago.

Having said that, I do think the city needs to densify and needs to have more walkable neighbhorhoods. But it isn’t about linear “streetcar suburbs” of the types of find in larger cities. Rather, it is a complex web of nodes. I don’t have to go into my proposed vision here, but it is something along the lines of “100 Monument Circles”. Think about the nodes at 56th and Illinois or 52nd and College and you get what I’m thinking about. But those neighborhoods are not the core of a competitive response to Chicago. Again, designing that responses is beyond the scope of this post. But I do want to highlight the flaws in the model of thinking that the Midwest’s small cities can only be successful by imitating the largest urban centers in America. That just ain’t so.

So while I agree with some of Mr. Lineberger’s prescriptions, his rationale is dubious at best.

Monday, November 17th, 2008

The Facts on the Ground

Conventional wisdom says cities should build on their assets. But they should really build on their liabilities. While assets can be building blocks for the new, more likely they are the legacy of the past, not the foundation for the future. The only reason cities have assets is because previous generations didn’t try to build on the assets of their day – they went out and created something new. And all too often “building on assets” turns into “defending the past”, as cities and states try to protect the industries and ways of doing business that worked in the days of yesteryear, but are failed strategies for the new economy.

I say “Invert the World“. Take the things you can’t change but you think are holding you back and figure out how to recontextualize them into an asset. Make your weaknesses into strengths. Turn what only you’ve got into a weapon no other city can match.

It’s critical for the Midwest to face up to the facts on the ground, stop whining about them and start doing something with them. There are the things we can’t change, but we can make them into something we can use instead of something to complain about. Some of these are:

  • Centrality. How do we make being in the center of the country instead of the coasts an asset? Typical logic revolves around being a distribution center, saying we are X hours from Y percent of the population. And while that’s true, I think there’s an opportunity to dig deeper and figure out how to exploit centrality in a more structural way.
  • Flatness.
  • No Boundaries. Cities like Indianapolis and Columbus have no barriers to growth in all directions.
  • Seasons. I particularly like how the Twin Cities embraced the notion of being part of the frozen north and being a winter sports haven.
  • North meets South (for cities in the Southern tier of the Midwest)
  • Rivers and Lakes. They often seem to divide or create barriers. But why does it have to be this way?
  • Water, more generally. We’ve got a huge amount of it.
  • Bottlenecks, especially for Chicago and Detroit. It’s unlikely they will ever be free flowing, so how do you make being a bottleneck work for you?
  • Large African-American populations. As I’ve argued before, the city that puts its black community at the center of its growth strategy is going to reap a big dividend.
  • Agricultural heritage. Why not own local and sustainable agriculture? Why not figure out the agribusiness model to make it work at scale? There is no such thing as environmentally friendly farming in irrigation dependent California, but there could be in the Midwest.
  • Unions. This one particularly intrigues me. Clearly, the era of achieving above market pay through the cartelization of labor is drawing to a close. Unions are, paradoxically, becoming obsolete as much of what they originally fought for has become standard in the workplace and globalization destroys their cartel function. But why not find a new role? Unions have long been active in worker training and certification. Why not take it a step further and morph the unions into educational institutions? Leverage unions as a key vehicle to help the Midwest have a competitive advantage through a uniquely skilled workforce that can’t be matched elsewhere.
  • Multi-state metro areas. For those that are, how can you make this work to your advantage instead of as a source of structural weakness?

I don’t suggest this is an easy task. But many of these are structural conditions other parts of the country don’t have. If the Midwest can figure out how to turn them into the assets of tomorrow, this creates a “wide moat” barrier that other cities without these structural advantages can’t match. It also allows the Midwest to live up to our brand promise, and build a New Midwest based on the best parts of the old and our unique geography and history, rather than trying to import someone else’s story. It’s time to stop playing defense, turn the tables and go on the attack. This is how you do it.

Saturday, November 15th, 2008

Charlotte, Bruce Mau, and Other Miscellaneous Musings

I’ve repeatedly shown how the Midwest’s cities are getting smoked not just by the Seattle’s and Austin’s of this world, but by the oft derided sprawlburgs of the South. Atlanta has a heavy rail subway system and massive urban infill, including lots of in city high rises. Nashville has a small starter commuter rail line and a form based zoning ordinance. Charlotte is building tons of high rises downtown and has a light rail line. These cities see other places with nice stuff and say, “We want nice stuff too. We want to be in the top tier of American cities”. They are hungry. I think the bulk of Midwestern cities aren’t even aware of what’s going on out there, much less want a piece of it.

The Overhead Wire took a recent trip to Charlotte. To help show what they’ve got, here are a couple of pics he took.

Light rail with new transit oriented infill being built directly next to the tracks.

New streetcar tracks going in.

Ridership – on a Thursday midday – not rush hour.

Gasp! – They actually have a zoning classed called “TOD” – Transit Oriented Development.

I got to check out one other program at the Chicago Humanities Festival. This one was a Bruce Mau presentation on something called “The Chicago Project”. For those who you aren’t familiar with Bruce Mau, please check out my review of his book “Massive Change”. The Chicago project is his entry in the Burnham Centennial celebration. He’s trying to develop new and innovative ways to reinvent the city to face the urban and environmental challenge of the 21st century. This was a very exciting project to me because it hits head on the biggest problem facing the city. Namely, that Chicago is out of ideas, a topic I previously covered.

The first example idea they gave was interesting, but not without its downsides. They talked about erecting a sort of greenhouse canopy over the L tracks on the Jackson Park branch of the Green Line. This would create a protected environment for local agriculture, as well as provide a mutually beneficial heat exchange with the L station. The idea is to bring agriculture into the urban context, especially into an environment that is a “food desert” with high percentages of obese people, and utilize electric rail for distribution. It’s a very interesting and creative concept. The challenge is that surrounding the L with farm fields is like surrounding it with park and ride lots. You disengage the L from the urban context and reduce the ability of transit oriented neighborhood development to emerge. This might work on a small scale, however.

Also in Chicago, from the better late than never file, the city was named the eighth most important global city in the world by Foreign Policy magazine.

I also had the pleasure of attending a lecture by Modern Art Notes blogger Tyler Green at the Central Library in Indianapolis. This was part of the Spirit and Place Festival. The presentation was entitled “10 Things I Hate About Contemporary Art”. I was expecting a bit of bomb throwing, but Green was much more measured and laid back in tone. Perhaps too measured. His ten things were amusing, however, and ranged from Mary Cassatt to “political art” to the art of disgraced gay televangelist Ted Haggard. Nothing he said challenged any of the fundamental tenets of contemporary art, however. One thing of interest to the Midwestern city: he thinks the Nelson-Atkins Museum in Kansas City is the most successful new museum building in the United States.

Moving on, this week’s Indianapolis Business Journal runs a longish interview with new Convention and Visitor’s Bureau chief Don Welsh. The answers were all extremely positive for the city in my view. I was impressed. Highlights include:

  • A new aspiration level to compete with cities in a high size bracket. “We will be a city that can compete with Boston, Chicago, Minneapolis, Seattle and Denver.” As I’ve long said, if you don’t have high ambition, you are sure never to get to the top.
  • Big plans to more than double convention business.
  • Rebranding the city. As I noted, “So Easy to Do So Much” is fine, but it says nothing at all about what Indy is about as a city and what’s more, it’s something most competitors would probably claim as well. His interim choice is “America’s Premier Convention and Sports City”, which is good as a statement of intent. Premier means first or best after all. And “sports” tells us something about Indy. I suggest that they continue digging deeper, however, and especially consult my post on “The Brand Promise of Indianapolis“. While it might not make a good marketing tagline, I think “Capital of the New Midwest” is the right aspiration.
  • Targeting medical and life sciences oriented events. This is strategic thinking in life sciences. Just as the city used the lure of non-profit orgs and events in the music and amateur sports business, there are intuitively great synergies with the life sciences effort. I believe that the city should try to focus on biomedical and infotech related events to the greatest extent possible to align the events strategy with the rest of the city’s economic strategy.
  • He thinks there will be an announcement of another 1,000 room hotel within give years.

The only thing I wanted from this was more. I would have liked to have heard plans about arts and cultural tourism, which absolutely must be boosted. Also, what he plans to do about the quality (as opposed to quantity) of the hotel rooms on offer. There is not a single hotel in downtown Indy I can unreservedly recommend to an upscale traveler. Even the Conrad, which has ok facilities, is dramatically below par in the service department. There is not a single boutique or design concept hotel in the city.

Staying in Indy, the Indianapolis Museum of Art got a nice mention in this month’s Surface magazine about its Art and Nature Park. There’s a nice rendering of the visitor’s center. Also, the IMA received a $2.6 million Lilly Endowment grant for its conservation department. This would ordinarily not rate mention here, but it highlights a point I’ve been making about strategy. In my previous posting I said I like to know people’s aspirations. At a recent lunch with IMA Director Max Anderson, I asked him what his aspiration was for the IMA. How can that museum carve out a place for itself on the international stage when it doesn’t have the compartive unlimited funds that other museum’s do, or a royal collection at its core? One of the things he said was that he wanted the museum to become known in the conservation field. A very good choice if you ask me. Now you see them acquiring the funding and specialized equipment needed to beef up that department. That’s the way to do it: strategy led development.

The new Indianapolis airport terminal opened this week, and the cutover went very smoothly, a big tribute to the airport staff given how horribly many of these moves are botched. At the dedication ceremony this week, Airport Authority Chairman Randall Tobias quoted Yours Truly’s blog review of the airport, which you can watch here should you so desire. You can see more airport coverage in an article from last March in the NYT, as well as one focused on security.

Which is more important in the new economy, jobs or people? Well, thinkers in this space don’t get any better than Harvard economist Ed Glaeser, whose findings suggest that it is labor supply that matters most.

Here’s a great streaming audio piece from Richard Longworth on globalization and the Midwest. If you think globalization isn’t relevant, think again. I’ve noticed that my globalization writings seem to attract the least interest, but I’m going to keep them up because everyone absolutely needs to be thinking about the implications for themselves and their city. Please be sure to skip the first 13 minutes of that audio program, which is random BS.

Why do many non-riders have a bad image of transit? Perhaps because of ads like this. Copied from Richard Layman’s blog.

It’s totally OT, but some guy tracked down the company behind those ubiquitious “Single?” yard signs referring you to web sites like www.laconiasingles.com.

Chicago. The CTA base fare is increasing to $2.25 under the budget approved this week. The CTA is also cutting over 600 positions.

The Tribune’s Jon Hilkevitch picks up on the transit funding theme from the recent election. Place like Seattle and California are voting to invest while Chicago does virtually nothing.

Local CEO’s warn Mayor Daley that huge layoffs are coming. There are also big worries about how travel cutbacks will affect the city.

Blair Kamin writes about Chicago’s skyline on hold.

The Tribune touts an undersubscribed program to pay for transit with pre-tax dollars.

Cincinnati. The Delta hub at CVG appears in danger in a post Delta-Northwest world. Delta will only say that they are positioning to keep it through 2009. Cincy is in an interesting position with both non-stop flights to Europe, but also America’s highest fares.

Hamilton County Commissioners gave their approval to the creation of a regional transit authority.

UncleRando puts together a sweet self-guided walking tour of downtown Cincinnati.

Columbus. The Columbus Foundation took in a record $119 million last year, bringing its assets to over $1 billion. This makes it one of the top ten community foundations in the country. They also give out donations of about $100 million annually.

Detroit. Like much of the rest of the city, the Detroit Institute of the Arts is in serious trouble.

Louisville. Local rail supporters are now looking at a commuter line to Ft. Knox.

A nice USA Today article that highlight’s Louisvilles art bike rack project.

A library expansion plan continues to move forward.

Milwaukee. The RTA voted 6-1 to ask the state to increase the sales tax to fund transit, including a new commuter rail line.

The Milwaukee County Board reverses course on privatization.

Pittsburgh. Jim Russell of Burgh Diaspora is now also blogging for New Geography. This debut is a compelling, as always, piece on the fallacy of brain drain.

Twin Cities. The final NTSB report on the I-35W bridge collapse blames gusset plate sizing, plus ancillary factors such as excessive construction equipment weight on the bridge.

Thursday, November 13th, 2008

What is a Strategy?

I have significant professional experience in strategy development. I often write about how things are strategically good or poor, or how such-and-such seems to have no strategy. But what actually is a strategy?

There are four parts to a strategy-driven program:

  • A vision for what you want to achieve
  • A set of capabilities or programs you need to get there
  • A list of activities to bring them into reality
  • Execution, execution, execution.

There’s also continuous re-evaluation and refinement all along the way.

It starts with a vision. As they say, begin with the end in mind. A vision can be quantitative or qualitative, but since you need to be able to know when you get there, some degree of measurability is a must. Without a shared community vision of what success looks like, it’s tough to get anywhere.

What is your aspiration for your city? That’s a question I love to ask since I find it very revealing. When I asked one local leader in Indianapolis, he said, “To be one of the top ten cities in America people desire to live in.” Previous generations of leaders said they wanted the city “To be the amateur sports capital of the world.” Chicago said one of its aspirations was “To host the Olympic games in 2016”. There also seems to be a local goal to elevate Chicago to the same level as London, Paris, Shanghai, etc. as one of the world’s truly elite global cities. As you can see, embedded in this is usually some notion of a target market and the need for a value proposition to serve it.

Many civic improvement programs don’t seem to have a vision of success built into them. I often cite life sciences. Practically every Midwest city has said life sciences is one of their strategic industries of the future. But what does success look like? I’ll consider one example, both good and bad, from the BioBelt program in St. Louis. They have a two part aspiration. One is to “create the premier location for plant sciences”. Premier means first, so that’s a clear aspiration. Plant sciences is a specific area to target. The other half of their goal, to be a “major center for medical sciences” is less good. Most cities have fairly large health care sector and medical school. What does it mean to be a major center? In a growth industry like life sciences it is easy to let goals like that lull you into a false sense of security because a rising tide lifts all boats. You can be adding jobs, but falling behind. Medical sciences is also a very broad term. I might prefer something like, “To be one of the top five centers for bio-informatics employment and company headquarters in America.” String a few of these together and you have the makings of a program.

As I’ve said before, the best strategies often target a whitespace opportunity where there is not an entrenched competitor and you can get first mover advantage. One could say, “To be the world’s #1 financial center”, but can you really displace New York and London? It also helps to pick something where there is an intuitive reason to believe you are well-placed to succeed. For example, Indianapolis said, implicitly, it wanted to be “one of the top three cities in the world for motorsport employment and company headquarters”. Given its massive motorsport heritage and brand, plus multiple world renowned racing facilities, this was a good pick. By the way, not all aspirations have to be around being at the top. It’s ok to shoot for average if that’s good enough for you.

The second piece of the puzzle is to figure out the capabilities and programs you need to have in order to achieve the vision. This is where the real hard work beings. If you want to be at the top of a market, you need to create a value proposition that creates differentiated appeal and which has sustainable competitive advantage. As Warren Buffet might say, you need to build a “wide moat” business. Wal-Mart figured out that the biggest driver of staple retail prices was price. It wanted to be the lowest price provider and have “always low prices”. It realized that it was in a commodity business, and thus it is all about having a cost advantage. So they built a business with huge economies of scale, purchasing power, a world class logistics infrastructure, limited discounting, no-frills buildings, world class IT, etc. to create a juggernaut.

As a city, you need to think about the capabilities you need across all the dimensions of a city. Some of these are:

  • Human Capital. For example, what types of people do you need to attract to be a leading city in the arts, life sciences, high tech, etc? This is often the most important item.
  • Legal and Regulatory Environments. This importance of this can’t be under-estimated. Some have argued that one factor in Silicon Valley’s ascendancy over Boston’s Route 128 corridor is that California does not honor non-competes and Massachusetts does. One reason Medco chose Indianapolis over Louisville for its 1,200 job mail order pharmacy system was that Indiana permitted remote verification while Kentucky did not.
  • Financial and Business Practices and Access to Capital. Is money available to achieve what you want? Will your venture capitalists fund a business based on a back of the napkin business plan, or will they put you through the wringer and make you sign most of your rights away?
  • Social Structures and Local Culture. This one is harder to change, but very important. New York and London are very open to outside ideas. Silicon Valley’s open network of firms and culture of collaboration is key to that area’s success. If you want to have an entrepreneurial culture, then it has to be more than ok to fail, it has to be expected as a normal part of business.
  • Facilities and Other Infrastructure. Do you need laboratories, incubator spaces, a race track, a cyclotron, a super-computer, etc? If, for example, like Portland, you want to be a transit, bike, and pedestrian oriented community, you need to built lots and lots of facilities just like they did. If you want to be an airport hub, you’d better have a good airport.
  • Academic and Research Capabilities. Kansas City wanted in the life sciences business and didn’t have a medical school, so it had to get local billionaires to establish an independent research institute.
  • Non-Governmental Organizations and Other Associations. Do you need an umbrella marketing group? Do you need to set up other types of associations? What about non-profits?
  • Corporate Community and Support Structures. How does the local business community need to be involved or not involved?
  • Geographic Considerations and Connections. Is your geography favorable to, say, an aspiration like “being one of the top five ports of entry for international immigrants”? Where else do you need to build connections to in order to support your ambitions?

This is a sample, and oriented towards thinking about industry clusters. Other aspirations might have a completely different list. And each one can lead to a whole other set of questions. As I’ve said many times, you can’t have a life sciences industry without life scientists. Why would these extremely in demand people want to pick your city? Cities are a complex, interconnected network of variables that all affect each other dynamically over time. You’ve got to think holistically and look beyond simple linear cause and effect.

Again, it’s not enough just to have answers to these questions that might work. You also have to consider the competitive situation. If your vision is attractive, then you’ll probably have lots of other people trying to get there too. They’ll see what you’ve done and copy it. Some ambitions, like having a great trail network, are available to all, but others aren’t. It’s not enough to just figure out how to serve a market, you have to serve it better than the competition. You have to build that wide moat business.

Once you’ve gotten to this, you then need to transition it into an action plan and go do it successfully. This is the realm of execution. If you don’t execute, then the greatest strategy in the world is all for naught.

As you can see, this isn’t easy.

Let’s walk through one good example, one I’ve used before, the Indianapolis quest to be America’s amateur sports event capital. That was the vision. It was easy to measure because you can total up things like events, attendance, and economic impact and compare yourself to others via league tables. It was a whitespace opportunity that targeted an underserved segment of the events market. It was also a key capability input into other aspirations like boosting the city’s downtown, improving its brand reputation and exposure, and making it a more attractive destination for companies and the labor force of the future. And the capabilities built for amateur sports are leveragable across other target areas.

What capabilities did the city establish? It created the Indiana Sport Corp. to manage the process of luring and hosting events. I don’t know if it was the first organization of its kind, but it was one of the first. It built many facilities such as the Hoosier Dome, the Natatorium, the Velodrome, etc. It leveraged the city’s strong volunteer base to create an army of people ready to help out and welcome visitors for these events. It designed its entire downtown around the facilities cluster, such as by putting its stadium directly next to the convention center, with nearby, attached, hotels, dining, and shopping. It created an approach to literally saturate and rebrand the entire downtown around the even being hosted. Perhaps most importantly, it sought out non-profit sanctioning bodies like USA Track and Field, creating a small industry mini-cluster. As part of this, it figured out how to provide services to those organizations and signed deals locking up long term event dates. This culminated with the push to lure the NCAA from Kansas City and building a museum there. They city also backed other initiatives through its life sciences effort, such as the National Institute of Fitness and Sports. And it has continued to sustain the effort. It wasn’t a one shot program but a long term effort that is ongoing.

The results were a big success. Indy is one of the top amateur sports events cities in America, and has remained one of the top players despite a lot of new entrants trying to get a piece of the pie.

I hope this posting illustrates some of what cities need to be thinking about when it comes to defining and achieving their aspirations.

Saturday, November 8th, 2008

Review: New Indianapolis Airport Terminal Part 7 – Conclusion

This is the last in a series providing a comprehensive review of the new H. Weir Cook Terminal at the Indianapolis International Airport. Before reading it, you might want to check out part one (the exterior), part two (the interior), part three (finishes and furnishings), part four (signage), part five (the artwork) and part six (miscellaneous, or rethinking the airport as public space).

So we come to the end of our tour. I hope it is clear by now that I really like this terminal. On seeing the renderings and construction photos, I was underwhelmed, and frankly ready to be down on the result. But I was very pleasantly surprised, not just by the overall quality of the product, but the attention to detail and the incredible amount of thought that went into every aspect of the design.

I judge and evaluate everything by the same standard: true, world class excellence. It may be that it’s not always worth paying to get that. On the other hand, if you deliberately buy a lower end product, you shouldn’t pretend you bought the high end. And with a price of $1.1 billion, you should be able to afford quite a bit. An airport is a once in a generation investment and a key facility in shaping the opinion that people have of a city. There is no greater marker of the civic ambition of a place than the design of public spaces and buildings, and transportation facilities are the public space par excellence in our modern mobile society.You never get a second chance to make a first impression, so I think any city with aspirations to compete in the world today ought to put some focus on its airport.

Still, it is almost impossible to create a large building like a terminal that is perfect. There are just going to be tradeoffs and the functional requirements sabotage too much. I’ve yet to be in any airport or stadium anywhere that I would give an unqualified A grade too. So any critiques of this facility need to be seen in that light. On the whole, I think the city did one heckuva job here. This is an airport terminal to be proud of.

Some of the highlights of the new airport are:

  • The incredible design integration and design harmony of the entire complex, from the control tower to the interior of the terminal. There is simply nothing I’ve experienced like this anywhere in the world. That’s right, anywhere in the world.
  • LEED certification for the entire complex built in up front. They are going for certification on 227 acres. Given that this will be the airport’s sole terminal, it means that IND is likely the most environmentally friendly and advanced airport anywhere in the world. That’s right, anywhere in the world.
  • Incorporating post-9/11 security measures into the design from the ground up, which should hopefully render this airport a joy to fly from.
  • The jaw-dropping entry into the Departures Hall and Civic Plaza, which creates a grand open space in the terminal.
  • The Civic Plaza itself, and the possibilities thereof.
  • The attention to detail and quality of design in all aspects of the terminal, including the finishes and even the signage.
  • The use of artwork and high degree of design integration of the artwork with the architecture and the use of art as a true design element, not just decoration.
  • The overall commitment to high quality and excellence in design, and the desire to transform the image of the city by creating a front door to be proud of.

There are some things I’ve been down on or think should be changed. Fortunately, the vast bulk of these are correctable.

The first is while the overall architecture is very strong, it uses a rather standard modern airport terminal idiom. The main building interior is jaw dropping, but the interior of Madrid Barajas is actually moving. Again, Madrid is not perfect either. And hiring Richard Rogers, that airport’s designer, may not have guaranteed anything. He designed Heathrow T5 as well, one that is extremely similar to the new IND terminal. I haven’t flown from there yet (thankfully), but from what I’ve seen of the pictures, Indy’s got nothing to be ashamed of when compared to that place. Airports seem to be one of the last architectural frontiers, as there aren’t very may inspiring airports I’ve seen, even brand new ones. So I’d rate Indy’s terminal building as very, very good, but not spectacular.

The other items are more discrete:

  • The baggage claim areas are a bit dull and need to be spruced up.
  • The gate areas are standard issue institutional, and need upgrades. In particular, the gate desks are poor.
  • Similarly, the curb side check-in desks should be upgraded.
  • The copy-cat “Interactive Passage” art work should be removed and replaced with something more original.

I’d also like to see the IND sculpture finished, which I’m confident it will be, and to see a major exit gateway structure built. I also hope that the Civic Plaza will be utilized as a true public space, not just a shopping mall and food court.

That’s not a lot that went wrong compared to a whole lot that went right.

Obviously the true test of the airport is to come. Terminal cutovers are notorious for disasters, as anyone who experienced DEN or LHR T5 can attest. The airport authority needs to get this right. Also, the true test of any structure is how well it functions. There’s a whole lot of functionality I didn’t scan for, such as quantity of power outlets and quality of wireless coverage, but if something goes wrong here, it will really mar things. As I noted before, Madrid’s airport looks awesome, but it has functional challenges. That’s why they don’t get an A either. So any statements about the new terminal have to be made with the caveat that the jury is still out on these points.

With that proviso in mind, I think there’s a claim that can be made for the airport, and I’m going to make it: This is the best airport in the United States. I haven’t been in every airport, but I’ve been in a lot. And there’s not one US airport I’d rate higher based on what I’ve seen. And for many places I haven’t seen like the new Detroit terminal, I’ve seen a lot of pictures, and I don’t think they measure up.

The best airport in America. The most environmentally friendly airport in the world. This airport is going to be a game changer for the city. It is going to dramatically reshape the image the city projects to visitors and locals alike. It’s certainly a risky proposition. With airlines struggling and the economy in the tank, paying for it isn’t going to be slam dunk. But you’ve got to place some long term bets, and I think the city placed a good one here.

This new terminal is the result of a master plan going back to the 1970’s. The runways were replaced to make room for it, land acquired for a future third parallel runway, I-70 rebuilt and relocated and depressed, and how this new terminal building opened. This was long term planning and long term follow-through. The only clouds on the horizon are the underpowered design of the I-465/I-70 interchange that INDOT is planning, and the question marks around future rail service to the airport.

I think this terminal is the most conceptually and architecturally successful major civic project the city has undertaken in many years. I think is shows that the airport authority people have that ineffable quality known as “getittude”. They just get it. The challenge now is to bring everything else up to that same standard. It’s doesn’t mean you can never compromise, but you have to know that you’re compromising and understand what you’re giving up on. I posted recently that the Midwest has a terrible track record of learning from good examples. Let’s hope this is a different case, and people use the success of this project and facility as inspiration to inform the projects of the future.

Further information about the airport is available in the Indianapolis Star’s special section.

Saturday, November 8th, 2008

Review: New Indianapolis Airport Terminal Part 6 – Miscellaneous, or Rethinking the Airport as Public Space

This is the sixth in a series providing a comprehensive overview of the new H. Weir Cook Terminal at the Indianapolis International Airport. You can also read part one (the exterior), part two (the interior), part three (finishes and furnishings), part four (signage), part five (the artwork), and part seven (the conclusion).

We’re just about finished with our tour. There’s just a few other things. During the Community Days open house that I attended to take these pictures, they had a band performing in the Civic Plaza. Here’s a picture.

This prompts me to think about the Civic Plaza space. It would be a terrible shame if this ended up as nothing more than a shopping mall and food court. It’s a fantastic gathering area outside of the security perimeter. In fact, airport officials are hoping to draw shoppers and diners who aren’t even flying. While that might make great financial sense, taken by itself it’s a spiritually impoverished vision. I’m fully supportive of commerce in an airport setting and hope the airport makes tons of money from it. But I think there’s a big opportunity here, an opportunity to get creative and turn this into a Civic Plaza properly so-called. To make of it a real gathering place. Consider the possibilities that immediately come to mind:

Imagine people being entertained with bands every day, not just on special open houses.

Imagine that the IMA, Eiteljorg and company didn’t just have a gift shop there, but used the Civic Plaza and/or one of the retail spaces there as an actual exhibit space. What an opportunity to not just bring people into contact with fine art, but also to build patronage for those institutions.

Imagine being challenged as IndyFringe or others sponsored performance art productions regularly.

Imagine being educated on the environment and environmentally friendly building techniques? With an entire (hopefully) to be LEED certified complex covering all major airport buildings, the new IND terminal is possibly the most environmentally friendly airport in the world. I said before there should be a permanent marker for this in the Civic Plaza, but why not go further and create an entire educational exhibit around it? Showcase everything that went into this building.

Imagine the various immigrant groups of Indianapolis mounting cultural exhibitions here to showcase the diversity of the community?

Imaging rotating traveling art exhibits such as something similar to what is being done with the public sculpture program downtown. In fact, why not have the public sculpture from downtown do a turn at the airport before moving on? I can easily picture the Booker pieces installed throughout the airport. Or include the airport in a joint downtown-airport program from now on. Think about what this might do draw linkages, even if subtle and subliminal, between the airport and downtown. Perhaps it might even prompt at downtown visit. (“If you want to see more cool stuff like this, head downtown to the following locations…”)

I see no reason that this Civic Plaza can’t be a venue similar to the Indianapolis Artsgarden, only bigger and better. Like the Artsgarden, it might have less than ideal conditions for art and performance. But people are going to be there whether there is anything inspiring for them to see and do or not. Why not make the airport the official West Side Cultural Center?

This is an opportunity for Indianapolis to get out on the leading edge and really redefine what an airport is and can be. I’m not saying every idea is right or that this is an exhaustive list. But again, there’s a huge opportunity here to go beyond the ordinary and create a true Civic Plaza.

I don’t know what the airport’s plans are here, so something like this might already be in the works. Stay tuned. I mentioned that the airport is starting an art foundation. This is something that can be used to fund the items above, though I believe the airport should pay for some of it out of its operating funds. As with the public art, this is an item of relative modest cost that can have a very big impact.

Speaking of international cultural exhibits, the city already put up a display honoring its Sister Cities.

This is commonly done at airports and I’m glad to see it here. It also dovetails with the mayor’s reinvigoration of that program.

Lastly, one nice thing the airport did during the open house was to allow people to walk out on the tarmac. As part of this, they pulled up all the shiny new equipment they had bought to let people check it out.

This is like the world’s awesomest Tonka truck. I felt like a kid again.

It’s really the details that matter, that separate the good from the great. These two photos are a great example. Look at how the airport authority took something utterly mundane like its plows and such and did something nice with them. Note the green gas tank on the top photo. That’s a very nice touch that adds both interest and whimsy to this object. It also softens the aggressiveness of the machinery without neutering it.

The bottom one is even more interesting. A little piece of art work was painted on the blade of the plow. It probably won’t last long, but that’s not the point. I think it’s a quirky distillation of a lot of what the airport did right with this project.

Saturday, November 8th, 2008

Review: New Indianapolis Airport Terminal Part 5 – Artwork

This is the fifth in a series of providing a comprehensive overview of the new Indianapolis airport terminal. You can also read part one (exterior), part two (interior), part three (finishes and furnishings), and part four (signage), part six (miscellaneous, or rethinking the airport as public space), and part seven (conclusion). This installment covers the airport’s artwork.

The airport authority spent about $3.9 million on art for the new terminal. Using a benchmark of 1% of the budget for public art, this would have equated to an $11 million art budget on the $1.1 billion cost of the complex. However, the terminal building itself was only a portion of that, and frankly, it looks to me like there was no skimping on art. The airport authority was able to do a lot with a comparative little.

With limited exceptions, I’m not going to attempt to judge the quality of the art itself. I will note that I think it is a mixed bag, with some pieces I like, and others that fall into the category of “airport art”. But let’s face it, the goal of an airport art program is not to create a world class museum. The artwork in this airport serves two critical functions:

  1. It is a design element. That is, the art is used as part of the interior design of the space. While it is useful as decoration and functions well as that, it is also very integrated into the overall design of the facility. It is clear that there was a significant amount of interaction and collaboration between the artists and the architects on this.
  2. It serves a signaling function. Let’s face it, part of the function of this art is to send a message to locals and visitors alike that this is a city that gets it and this is a city that cares. It says, “We are willing to spend money on art. We understand the world we are in and aspire to compete with other cities at the highest levels. We care.”

The art was selected via an open competition, with the winners a mixture of locals and out of towners. The first piece you see is from one of the locals. This is piece entitled “Breath” by Greg Hull.

These red objects dynamically expand and contract, hence the name. Here you see the very strong integration between the architecture and the art. First, we are in an atrium area of the parking garage. The atrium itself is noteworthy for providing a sense of openness to what is normally a claustrophobic space. The skylight only adds to the effect. But if it were just empty air, it wouldn’t be nearly as effective. Rather, it would just a be a sterile, empty box. This fills the space while still leaving it open, and, more importantly, filling the space with color. Without the dramatic red, we’d have a very drab and unappealing space. It also adds motion which is nice. This technique is used repeatedly throughout the terminal. The design is all white steel and glass. This could have left it cold and antiseptic. But with the artwork the space is enlivened with color and dramatically warmed up. The art allowed the architect to use a clean, modern look without the downsides of sterility. Very nice.

This piece is doubly functional, since the expanding and contracting red balls attract the eye when you park your car and literally draw you to this atrium, which is the way into the terminal.

You can read more about this piece and the artist here.

As we cross into the terminal, we’re treated to this piece, called, unimaginatively, “Interactive Passage”.

The lights blink on and off in various patterns, accompanied by sound effects and electronic music. I hate it. I don’t hate it because it is bad; I hate it because it is so derivative. A commenter elsewhere said there is something similar in Detroit, but what immediately came to my mind was the “The Sky is the Limit” at O’Hare, which is the light sculpture in the underground passageway between Concourse B and C in Terminal 1. If part of the function of artwork is sending messages, then the one this one sends is, “We’re a bunch of bush-league copy-cats”. I think this piece should be ripped out and replaced with something original. Even nothing at all would be better.

Here we see “Jet Stream” by Rob Fisher from Pennsylvania, which are the pastel metal bird/clouds suspended from the ceiling of the civic plaza.

You see from a distance that this serves a similar design function to Breathe. You’ve got this huge, open, skylight Civic Plaza space. That vastness is key to its effect, but it also can dwarf the human scale. This art work lowers the high ceiling of the space while preserving its openness. Very effective.

There is also art to look at while waiting to clear security. Where people are likely to spend some time waiting – security, check-in, baggage claim, the gates – are the most key areas to get right, and I’m very glad to see art work instead of the typical advertisements. We’ll see how long we survive without the latter, however.

In several spots we see art work integrated into or literally used as finishes. For example, this glass mosaic tile is actually a piece of art I believe, but it is used as a wall covering for drinking fountains the concourse, very similar to how regular mosaic tile was used in the departures area (see part three).

I also noted before that there was artwork in the terrazzo floor.

I believe this one is called “The Glory of Sports in Indianapolis” by Tom Torluemke of Hammond, Indiana. I think it is an excellent choice to highlight the city’s ongoing commitment to be a sporting capital here. What’s more, the use of an artist from Northwest Indiana is great. Remember how I said Indianapolis needed to deepen its linkages with the rest of the state by seeking to become the entire state’s shared cultural ground? This is one way you do it. While we should never lose sight of this being the Indianapolis International Airport, showing that it is also Indiana’s airport is key as well. When visitors drive in from Terre Haute to fly to visit family in Boston, do you want them to think they are arriving in a foreign city when they pull into the parking lot at IND, or that they are coming home? I think including artists from not just Indianapolis, but elsewhere in Indiana, was a very intelligent decision. As was the decision to avoid the “no out of towners need apply” approach that has crippled the city’s design for so many projects.

I showed this one before, but it’s worth showing again. The compass directions in the Civic Plaza flooring are actually a piece of art, “Great Circle Route” by Chicago’s Lynn Basa. I think this is delightful. It adds a note of playfulness and fun without being cheesy and even manages to serve a vaguely utilitarian purpose.

The baggage claim area is flanked by two outdoor sculptures. I mentioned before that the baggage claim areas are dull and need to be improved. I still think that. However, the glass walls of the side allow your eyes to be drawn to these sculptures.

The above shot shows the context of the art in an outdoor plaza. This one is a lawn chair with balloons that you’ll probably have to enlarge the picture to see properly. As you can tell from the people out there, these sculptures are publicly accessible. I think these protected outdoor areas (call it a plaza? a garden?) are nice spaces in themselves and again show the quality of the design. How many airports have something like this? Here is the one on the other side of the terminal.

Moving back inside, here’s a colorful piece above an escalator. Sorry for the blurry pic.

I’ll finish this up with what might be the strongest integration of art into the design. I noted before that I thought the concourses were fairly standard and uninspiring. Well there is one big exception to that, and that’s the use of large stained glass panels in the windows at several locations. There are 14 of these by British artist Martin Donlin. These are in bold colors and make an extremely dramatic impact on what would otherwise be (and, disappointingly, otherwise is) a totally institutional space.

See what I mean? Several of these have poems and such inscribed. Here are a few more examples.

Again, with the artwork we see that the designers of the airport showed a great deal of thought and care in their work. They didn’t have to include art at all. Most other major local civic structures of recent vintage didn’t include any. They could have treated art as a checklist item or said no out of towners allowed. But they didn’t. Rather, they held an open call for submissions, selecting a mixture of local, state, national, and international talent. And they integrated the art very carefully into the overall design of the airport. They didn’t just plop it down or use the art as a prop. It’s just not pure decoration. It’s a true design element. You can read more about the process they went through in this article.

I wasn’t able to include photos of every art work here. There are over 30 pieces by 16 different artists. Be on the lookout for them if you fly from this facility. And there is apparently more to come. The airport has a design in the works for an “IND” entrance gateway piece. There is no funding for it yet, but the airport authority has created a foundation to raise funds to complete it. I’ve got other ideas for what this foundation could do as well, which I’ll cover in the next installment. A complete list of the artists and their works is available here.

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