Tuesday, April 6th, 2010

Carol Coletta: Innovative Cities

[ CEOs for Cities is a really fantastic organization you should get to know if you don’t already. Their work on the Talent Dividend and more is putting matters critical to future urban success on the agenda of national and international of urban leaders and advocates. Their president, Carol Coletta, kindly allowed me to share a portion of one of her recent speeches with you – Aaron. ]

CEOs for Cities is a U.S. network of urban leaders – mayors, corporate CEOs, foundation officials, university presidents, and business and civic leaders – who are building and sustaining what we call “next generation cities.” Our research is focused on uncovering new insights on what makes cities successful. But we don’t stop there. We spend a great deal of effort framing our findings in ways that help our partners build local constituencies to move from insight to action.

City Dividends

Let me give you a quick example of a recent piece of work that can illustrate four larger lessons about Innovative Cities.

We looked for ways in which cities could make small improvements in performance that would yield big financial gains. And we found three: the Talent Dividend, the Green Dividend, and the Opportunity Dividend. The Talent Dividend was a one percentage point increase in college degree attainment. The Green Dividend was a one mile per day reduction in VMT. And Opportunity Dividend was a one percentage point decrease in poverty. Together, we called these the “City Dividends.”

It turns out if we could make these small improvements in performance in each of the top 51 metro areas in the U.S. – the metro areas with a million or more people – it will yield an annual dividend of $166 billion every single year. The yield comes from $124 billion in additional personal income, $29 billion in money not spent on cars and gas that would then remain in local economies, and $13 billion saved on current government support payments to people in poverty.

As we toured 105 cities last year, we were able to show each metro area what their own local City Dividends amounted to. And in all cases, they were substantial. In Chicago, achieving the City Dividends – those relatively small improvements in performance in three key areas – is worth $7.2 billion. In Dallas, Texas, it’s worth $4.6 billion. In San Jose, home to Silicon Valley, it’s worth $1.4 billion.

In fact, in most communities, the Talent Dividend alone was worth more than the payroll of the largest private employer in the metro area.

Think about that. In the midst of this economy, the prospect of adding personal income equal to or greater than the payroll of your largest employer is quite a carrot.

Lesson One: Take Action, Don’t Just Talk

You might think, based on the power of the numbers and the relatively small improvements in performance required, we would have people clamoring to be first.

But that’s not the case. Not even close. In fact, the first question we were asked in almost every community was: “Who else has done this?” And the second question was, “What are the best practices?” Those, of course, were ridiculous questions in the face of a brand new idea. But this is what you get when you introduce a new idea.

In this world, there are a very few leaders and a whole lot of followers. And that is my first insight about innovative cities. The vast majority of us want to talk the innovation talk. We just don’t want to walk the innovation walk. Because innovation requires risk. It requires daring. It requires having enough confidence to invent your own best practices.

Gary Hamel is one of the great innovation experts, and I’ve had a number of opportunities to interview him. He told me that anything that is identified as a best practice probably isn’t, because it has been copied too frequently to be “best.” The best practices, he said, are at the leading edge of practice, not yet widely known or distributed.

That’s a good thing to keep in mind about innovative cities.

Lesson Two: Ask Better Questions

Let me use our City Dividends work to illustrate another lesson of innovation. Take the biggest dividend, the Talent Dividend. It can be tough to measure talent directly, so we use its proxy: college degree attainment. And we can associate college degree attainment with 58 percent of any city’s success as measured by per capita income. But we also know that when it comes to identifying talent and its potential, college degree attainment is a convenience at best.

But most people sadly assume that when we talk about “talent” we are talking about a special class of people. But I believe that all human beings have some kind of talent. They are just not all able to develop their talent and put it to work.

Now imagine what our municipal response would be if we were asked to build a system to develop all of the talent in our cities to its fullest and put all of our talent to work. Does anyone believe that our talent development would begin and end with schools? Or at age 22?

When you change the question, you get a whole different set of possibilities. And that is my second observation about innovative cities. We have to ask better and more imaginative questions to produce innovation.

Last week, I spent two days with people from across the US searching for ways to re-start the economies of shrinking cities and to reduce poverty. I was repeatedly struck by the limited nature of the solutions, in large part because of the limited nature of the questions.

I’ll give you an example: At one of these meetings, a number of people were calling for ways to reduce the debt burden American students incur when they attend college. As someone who graduated with no debt, it is astonishing to me that students today graduate with debt of $60,000, $70,000, or $100,000. But when I suggested to the group that instead of subsidizing debt, perhaps we should reduce the need for debt by redesigning college to lower its cost and therefore its price, the suggestion went unnoticed, unacknowledged. It was simply outside the solution set they had considered before. I was asking a different question, but no one was ready to hear it. And that is, unfortunately, what happens with a lot of would-be innovations.

Lesson Three: Make Fundamental Change

A third observation about innovation comes from our work on the Green Dividend. It is fashionable in U.S. cities to pretend that sustainability can be achieved with a few add-ons — a few green buildings, a few hybrid cars, a green roof here and there. But anyone who has looked at the challenge knows that the only way we can ever achieve serious reductions in carbon emissions will require, among other things, changing what I call the basic blocking and tackling of city making – how we use land and how we provide for transportation.

But no one really wants to change the basics of what they are doing today. Change is contrary to human nature. So we comfort ourselves that we can get what we want with add on’s. Add on’s require much less pain.

When we explain to urban leaders that they can achieve a substantial Green Dividend and put more money into their local economies by reducing driving by just one mile per day, the reaction too frequently is, “We can’t do that.” Really? Why not? Because we would have to change the way we do business around here. And nobody wants to do that.

So I suggest to you that while innovation often requires a change in fundamentals, the resistance to changing the fundamentals can be formidable.

Lesson Four: Span the Silos

A fourth observation about innovation is this: Innovation lies at the intersection of single issues and specialized organizations. We see this in our work at CEOs for Cities. CEOs for Cities was actually founded as a cross-sector organization, so working across specialists is in our DNA. It has spilled over into the way we tackle issues.

I talked earlier about our work on increasing Talent. Talent, in all its fullest, is not just about schools. It’s not just about early childhood education. It’s not just about workforce development. It’s also about entrepreneurship, volunteer opportunities, libraries, parenting, urban design, even the culture of a place – do we believe everyone is differently talented and all talent ought to be developed and put to work.

But we don’t think about these things as a system. These specialists don’t talk to each other. There is no sense of what each of these specialties is supposed to produce and how together their results add up to an overall Talent goal for a community.

It’s sort of like the U.S. health care system (and I use that word “system” loosely). We have great health care specialists but our overall health is on the decline. Three big reasons for that is that food, exercise and urban design are not considered to be our health system. We’re not including some of the biggest determinants of health in the health care system.

It’s been my experience that you have to be very determined to force this conversation. It certainly doesn’t happen naturally. Quick example. We know from our research that one of the most straightforward things you can do to reduce poverty rates is to make sure poor people don’t live in neighborhoods of concentrated poverty. If you’re poor, where you live matters. Why? Because if you’re poor and you live near people with higher incomes, you have much better access to opportunity in the form of jobs, education and networks.

But how many times are the planners and developers in the room when we talk about poverty? Yet, it is very clear that it is at the intersection of poverty and place that one of the solutions to poverty lies.

We have to ask more imaginative questions that span silos. We recognize that there are no best practices yet for the answers we will come up with. So we are attempting to orchestrate the development of vision and knowledge of next steps among constituents who deepen their belief as part of the process, thereby preparing to overcome resistance.

Adapted from a speech at the Global Forum on Innovative Cities in Curitiba, Brazil on March 10, 2010.

Carol Coletta is President of CEOs for Cities, a network of urban leaders dedicated to building and sustaining the next generation of great American cities. Follow the CEOs for Cities blog at www.ceosforcities.org/blog.

Topics: Economic Development, Education, Public Policy, Sustainability, Talent Attraction

7 Responses to “Carol Coletta: Innovative Cities”

  1. George Mattei says:

    Very interesting. I really like her insight on how hard change is and how reframing questions can be very valuable. Good stuff.

    I do wonder, however, how they calculate their values of these dividends. Would a 1% reduction in vehicle miles really result in that big of an increase in wealth? Or are you just shifting your payments from the car dealer and the gas station down the street to the local transit company? Maybe you buy a car made in Japan, but maybe those trains or buses are made there, too.

    I find one of the easiest ways that people misrepresent the impact of something, intentionally or not, is to add up the benefits of something without also factoring in the costs of NOT doing something else with those same dollars. I wonder if that’s what’s happening here, but you can’t tell because it’s just an excerpt. An action has to produce a NET benefit to really have an impact.

  2. George, the research behind the city dividends was done by Joe Cortright at Impressa Consulting, a respected economic. I haven’t looked nearly as much a the green dividend or opportunity dividend, but the talent dividend work foots extensively with other research such as that of Ed Glaeser.

    I might suggest that the matter of how you achieve the change does matter. If you reduce poverty by kicking out poor people, you really haven’t improved anything globally. But I think if you approach the problems in a sincere way and not in a shell game way, there are real benefits across all three dimensions.

  3. Alon Levy says:

    The talent dividend is overstated. As college attainment rates rise, the same jobs start requiring more education because of the extra competition; only part of the increase in graduation rates goes to higher productivity. That’s why in the last 35 years, Americans without college degrees have actually seen their wages fall, keeping education levels constant.

    Overall, an increase in education corresponds to a rise in productivity and in wages, but you can’t compute the social college dividend by looking at the individual college dividend.

    At any rate, there’s a much stronger arguments for lowering college costs: it makes college more accessible to the poor and middle class. If only the upper class can afford good education, then social mobility is low, and soon the social system becomes a plantation-style aristocracy. Growth requires equal opportunity.

  4. carphobe says:

    Totally agree on so many points. Of course, most business communities believe that the higher the VMT the better, and thus widening and building roads is always good. Maybe this will help bust that myth.

    The silo and talk/action issues are big players in my town, where the mayor preaches sustainability and walkability, and the engineering department ignores the planning department’s great bike/ped plans, and builds nothing by roads for cars, with peds as a total afterthought.

    I will continue to berate Urbanophile’s thinking that 465 needs another lane to feed the auto/VMT-hungry Fishers wealthy. This is the standard, historic answer that is anything but a fundamental change. It does nothing but increase VMT, separate wealth from poverty and subsidize sprawl and innovationlessness. Is denovation a word??

  5. JWirtz79 says:

    I saw her give a lunch speech at the Cultural Center in downtown Chicago yesterday. Did you go too?

    I thought it was interesting, but very broad (and loud). Thanks for the additional details.

  6. John, I did not go. I wasn’t aware she was talking. I’ve seen her speak before though.

  7. JamesR says:

    She’s right. Especially on Lesson #1. Municipal governments are the most risk adverse creatures in existence. Nature of the beast. I say this as a public sector planner, FWIW. I think that in reality, a lot of the most creative and progressive policy is the stuff coming out of organizations working outside the government framework, and that it is they that are most able to making the most effective and long-lasting impacts in the urban life of the community.

    I’m thinking of community development corporations and other neighborhood-based groups who are frequently close partners of the local government, but also have the latitude to be the opposition if and when it’s necessary. They are the ones that are able to mobilize a constituency in support of bold & innovative practices, whereas the municipal government cannot be the one to do so because it is beholden to the entire populace – many of whom are beholden to “the way it’s always been”. We (those working inside government) need these extra-government actors with vision to push us in the right direction. Per Lesson #4, they are also the ones that can help to bridge the notorious entrenched government silos and make sure that one hand is talking to the other.

    There are a lot of communities out there who could benefit from the kind of civic fabric that CDCs and the like help to reinforce, but are instead forced to do without. Dense, diverse inner ring suburbs come to mind as places that could really use CDC-type organizations operating on a pan-municipal or regional level; it doesn’t make sense to have a nonprofit of this type operating exclusively in, say, a New Jersey borough of 2 squares miles in area with 16,000 people. You tend to see neighborhood nonprofits in cities of 50,000-100,000+, but in wide swaths of this country that have fragmented municipal governing structures, they’re absent, yet sorely needed. That’s a whole other topic, though.

    Great piece.

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