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Sunday, July 6th, 2014

Ruining Rhode Island – Missing the Context

My latest article is online over at City Journal, and shows how Rhode Island has become an economic and demographic basket case, one not making headlines largely because the state is small enough to fly under the radar. I’ll give you a trigger warning on this one. While making clear that the Republicans of Rhode Island have hardly crowned themselves in glory, I focus on the follies of the Democrats who have had overwhelming control in the state since 1935. If you don’t want to read this one, try one my previous posts about the Tea Party instead. You can also read a response from the left at RI Future.

In my article, titled “The Bluest State,” I attribute the state’s failure to poor governance and corruption (bi-partisan), a complacent populace, and far left policies that have imposed top 5 or top 10 levels of high taxation, high service/low investment spending priorities, stifling regulations, and very powerful public sector unions on a state radically unsuited to them.

The response by some in Rhode Island was to say that while the legislature is controlled by Democrats, they are conservatives, not progressives. Or pointing out Republican failures like Gov. Don Carcieri. I have a very simple reply to that. If the policies of Rhode Island are indeed conservative, then progressives should have no problem rolling back the taxes and regulation, rebalancing spending, and curtailing union abuses there. Welcome aboard.

In any case, the macro problem is that this collection of policies was implemented in a place completely unsuited for them. The ideas were imported from elsewhere and implemented in a way that ignores the context. I plan to explore that in a three part series starting today. This post will be about the competitive context of Rhode Island. Thursday I’ll lay out a “decision toolkit” of questions that can be used to evaluate any proposed policies there. And next week I’ll give some very specific recommendations in the form of an expanded and more detailed list from my article.

Let’s start with the context. That’s something that’s really been missing from the Rhode Island discussion and is absolutely critical – because without the context, you can’t really property evaluate any proposed solutions to the economy.

I want to start by going back to the Slater Mill in Pawtucket 1793. Why did America’s industrial revolution begin in Rhode Island? There are a lot of reasons. We were a coastal country, and Rhode Island was on the coast. Rhode Island was right in the middle of that Northeast Corridor from Philadelphia to Boston that was far more dominant then than it is now. So Rhode Island was in the middle of the action – it was centrally located. It was an era of water transport and power, and Rhode Island had the seaport access, and numerous small rivers it could dam for power. It was in the intellectual center of America, and had a freethinking culture that was open to the new and the different. And once the first mill was built, Rhode Island had first mover advantage in the marketplace.

So in a sense where else in America other than New England could this have happened? Not too many places. You couldn’t have done textiles in North Carolina back then because their entire economy and culture was a slave based agricultural economy, for example. It would have been a non-starter.

So what we see is that Rhode Island and New England had major structural competitive advantages that let them initiate and then dominate the early stages of the industrial economy in America. It was like Detroit in cars, or Silicon Valley in tech today.

Fast forward a hundred years to the 1890s, and that’s when Rhode Island’s textile base began to erode. What happened in that hundred years that caused this change? Well America was a very different place in the 1893 than 1793. Instead of a coastal nation we were a continental nation. Rhode Island was no longer centrally located, it was on the periphery. The primary transport mechanism was no longer ship, it was rail. Power was no longer water, it was coal, steam, and electricity. Slavery was abolished in the South, and they had to find something else to do. Religious freedom and free thinking ways were no longer the exclusive possession of Rhode Island. And as a consequence of these changes, Rhode Island no longer had a structural competitive advantage or fortress position in the industrial marketplace. Instead, it was subject to something it didn’t have originally, and that was competition. This newly competitive environment posed – and still poses – particular challenges for Rhode Island because it is so geographically small and thus border arbitrage is easy.

What Rhode Island needed to do was to recognize that its circumstances had changed, and that it need to start acting like it was in a very competitive market instead of one in which it held all the cards. That would have been difficult in the best of circumstances candidly. But it didn’t do that. And I’d argue that’s true up to the present day. And it’s easy to understand why. Rhode Island had a 100 year run in a market dominant position. Keep in mind, Detroit only had 60 years of success and dominance in autos, max. Rhode Island had a hundred years of industrial dominance, and successful merchant trading and such industries before that. So clearly that stamps the thinking of a people. It has to. But nevertheless, the situation has changed.

And that, fundamentally, is the most important thing to understand about Rhode Island’s condition. It’s been acting like it’s still selling a premium product from a structurally advantaged position like it was at the beginning, when it’s actually selling a commodity product into a highly competitive global marketplace. It’s been trying to sell a commodity product at a premium price point in terms of costs, taxes, regulation, etc. and unsurprisingly hasn’t gotten a lot of takers. The stone cold reality is that with limited exceptions, Rhode Island has no marketplace leverage. One might blame this on federal level neoliberal policies, but that doesn’t make reality any less real for the Ocean State.

The state hasn’t recognized its problem of trying to sell a commodity at a premium price point. That’s for several reasons. First is that the policies that are intended to embody Rhode Island’s values were imported from other places that have radically different conditions. Rhode Island is a state with progressive values. There’s nothing wrong with those values and in fact I share many of them. But where do the policy ideas that instantiate progressive values come from?

To just pick an area that’s been a debate in the gubernatorial race, every Democratic candidate has pledged to raise the state minimum wage to $10.10/hr, which would be the highest statewide level in the country. Where did that idea come from? Did it originate in Rhode Island? I don’t think so. So the question we need to ask is where did it originate, and what are the conditions like there?

I’d argue most progressive policy ideas come from three primary places: San Francisco, New York, and Washington, DC. And if you look at those cities, or other progressive capitals like Boston, what you see is that they are like Rhode Island was back in 1793. They have a structural competitive advantage in the marketplace because they have captive, high value industries that are bound to the geography where they are located, operate at global scale, and spin off huge amounts of cash. Wall Street prints money and it isn’t going anywhere. Silicon Valley isn’t going anywhere. Speaking of printing money, the federal government literally prints it and is not pulling out of DC. Harvard and MIT aren’t moving out of Greater Boston. These places have cash registers that never stop ringing. So those cities can get away with doing things Rhode Island can’t because it no longer has those fortress industries like they still do today. So the state has been importing policy ideas from places that are nothing like Rhode Island.

That includes the rest of New England. If you pan back the lens, what you see is that there are really only two poles of wealth in New England. One radiating out of Boston. The other out of New York City into Connecticut. To the extent that you’re able to tap into Boston or New York money, you’re doing pretty well. To the extent that you’re not, you’re likely as bad off as Rhode Island. Most of Massachusetts, its so-called Gateway Cities and all that, are exactly like Rhode Island. Connecticut is chock full of struggling industrial cities like New Haven and Bridgeport. Even their white collar economy is in trouble.

The states of Massachusetts and Connecticut only are able to do what they do because of the high value they capture in Boston and places like Greenwich and Stamford. Even New Hampshire similarly is almost entirely dependent on access to Boston money. Rhode Island simply looks worse, because it has less access to New York and Boston money than those other states.

That’s where I’ll actually defend Rhode Island’s leadership. In a previous article, I argued that Rhode Island’s problem isn’t poor leadership. I’d like to qualify that. Rhode Island has indeed been poorly governed, and that’s a problem. But it hasn’t had uniquely bad leadership. Some people like to say that the problem is Rhode Island’s leaders are stupid whereas those in other states are smarter or less venal. I don’t think that’s the case. Three House speakers in a row got indicted in Massachusetts. But you can get away with things in Massachusetts that you can’t in Rhode Island because of the Boston area economy. It’s like Warren Buffett said: when the tide goes out we get to see who’s been swimming naked. The tide went out on Rhode Island a long time ago whereas some other places have been luckier in that regard.

This is a painful reality for the state because Rhode Island takes its cues from its neighbors. But they’re richer. It’s like three brothers, one’s a doctor, one’s a lawyer, and one’s a teacher. The teacher isn’t going to be able to live in as a nice a house as his brothers. That’s just financial reality. And that’s the situation Rhode Island is in. Because neighboring states have access to money from fortress industries. Rhode Island doesn’t. They’re market makers; Rhode Island is a market taker.

Another aspect of missed context is that Rhode Island has over-estimated its quality of life advantage. It really struck me when I was living there that the idea that Rhode Island has a markedly superior quality of life to other places is just sort of taken for granted. It’s a bedrock axiom. I think the quality of life is good in Rhode Island. I’m not going to criticize it. And I think that the assumption of superiority actually was true not that long ago.

But I visit a lot of places, and I can tell you, America has really raised its game in the last two decades. I live Indianapolis now, and when I first started spending time there back in the early 90s, to be honest, it was like Siberia. You wouldn’t want to live there unless you were from there. Today, it’s completely different. Indianapolis has more and better microbreweries than Rhode Island, better coffee, pretty good restaurants – not as good as Rhode Island’s but definitely serviceable – a big farm to table movement, their own local fashion magazine – I mean like a real print magazine – and a lot more. It’s night and day.

Rhode Island hasn’t fully woken up to how much better life has gotten in a lot of places you never would have considered living before. There’s a new level of competition out there that was never there before.

Add it up and Rhode Island needs to have a big mindset shift. My observation is that candidly, it’s had an entitlement mentality. I attribute that to three sources I talked about above:

One is Rhode Island’s rich historic legacy which is a justifiably proud history. Part of that legacy is its history as a highly competitively advantaged economy in the past. But that history can blind the state to the reality of today, which is very different.

Two is that Rhode Island feels entitled to live like its neighbors, its brothers if you will, in New England, when they’ve got better jobs.

Three is that Rhode Island hasn’t recognized the extent to which other places have improved their quality of life such that its advantage is much slimmer than it realizes.

Rhode Island has to realize that it is not entitled to live like it used to or like California lives today. And that’s tough to accept. In America especially, with this deep seated narrative of economic progress, regression is a bitter pill to swallow. We’ve seen the results of that in post-industrial America across the board.

That doesn’t mean rejecting every progressive idea. It does mean assessing what makes sense for the state in light of its weak marketplace position. The values of Rhode Islanders have to be embodied in a policy set that makes sense with its own economic competitive context, not somebody else’s.

The problem here is that there’s hasn’t been indigenous R&D to create locally appropriate policies. That’s actually one reason I started my site so many years ago when it was focused on smaller Midwest cities. Those cities were – and sadly still are for the most part – passive importers of ideas about what cities should be. I wanted to start a conversation about Midwest cities on their own terms. I’m all in favor of stealing good ideas from anybody, even NYC. But you have to ask whether it makes sense locally and how to do it. And also be developing your own “in-house” ideas as well. That’s what I set out to do with this site.

So if Rhode Island wants to perform differently, it needs to create an indigenous R&D capability, especially as most national progressive ideas emanate from elite citadels, which Rhode Island is not. This will be hard because to many of Rhode Island’s intellectual elite came from places like New York and Boston, and thus are steeped in that way of thinking.

But I have an idea. There are a lot of people in Rhode Island who are heavily involved in boosting the fortunes of developing counties. Would they go into a developing country and say that the leaders there should adopt California style taxes, services, and regulations? No way. They’d realize that these places need to start with where they are at. The immediate needs in many places are better governance (esp. less corruption), basic services like clean water and sanitation, education, upgrading infrastructure, and facilitating economic development. Rhode Island isn’t a developing country by any means, but it’s not California or New York either. No matter how much people in Rhode Island might be in agreement with the values or policies of those places, the state is simply in a completely different situation. It needs to focus on the basics. So maybe those Rhode Islanders who are involved in developing country work can try to think about Rhode Island through that lens to see what ideas can be generated. Again, Rhode Island is NOT a developing country, but there may be things that can be learned.

The good news is that change is possible. Though Rhode Island has huge problems and a long road back to recovery, I believe there’s certainly a lot of room to believe that it can be a lot more successful than it is. I’ll delve into the specifics of a starter program in the next two installments.

Thursday, July 3rd, 2014

Do Cities Really Want Economic Development?

My latest column is online in the July issue of Governing Magazine. It’s called “Do Cities Really Want Economic Development? My conclusion is that in all too many places, the answer is No. The status quo is actually preferred, no matter what people might say.

All we have to do see this is to apply Occam’s Razor to the condition of our cities. What’s the simplest explanation that explains the facts? In any number of places, if you just assume that civic leaders and maybe the broader community itself actually want the place to go down the tubes or at least stay the same, everything else falls into place.

Now it may be that this is really an emergent property of the social system rather than intentional. What’s that saying? “The system is producing precisely the results it is designed to produce.” Maybe Abilene Paradox style, no one really wants the city to fail but collectively everyone ends up choosing decline. But then you see so many examples of crookedness, cronyism, criminality, and self-dealing that pop through into the public view, and the benefit of the doubt starts to crumble.

In any case, here’s an excerpt:

Economist David Friedman once told this joke: “Two economists walk past a Porsche showroom. One of them points at a shiny car in the window and says, ‘I want that.’ ‘Obviously not,’ the other replies.” That is, if the first economist had really wanted the Porsche, he would have bought it. Our choices tell us more than our words about what it is we really want.

Problems are problems, but they are also sometimes solutions to certain sets of questions. One of these is how to mobilize, allocate, and deploy community resources and power. Fighting decline has become the central organizing principle in many places.

Jane Jacobs took it even further. As she noted in The Economy of Cities, “Economic development, whenever and wherever it occurs, is profoundly subversive of the status quo.” And it isn’t hard to figure out that even in cities and states with serious problems, many people inside the system are benefiting from the status quo.

They have political power, an inside track on government contracts, a nice gig at a civic organization or nonprofit, and so on. All of these people, who are disproportionately in the power broker class of most places, potentially stand to lose if economic decline is reversed. That’s not to say they are evil, but they all have an interest to protect.

Consider one simple thought experiment: If a struggling community starts booming, that would eliminate a big part of the rationale for subsidized real estate development, which constitutes the principal form of economic development in all too many places, and which benefits a clear interest group. It might also attract highly motivated, aggressive people from out of town, folks who are highly likely to agitate for better than the current inbred ways of doing business. This would inherently dilute the positions of the current powers that be.

Read the whole thing.

Wednesday, July 2nd, 2014

Hello, Calgary!

City slogans and songs are notoriously cheesy and no one locally even likes them. Ira Glass of This American Life heard that there was an exception to this rule in Calgary. The first segment of this show below is the almost unreal story of what happened when they looked into this. There’s a short promo at the beginning to get through first. If the embed doesn’t display, listen at the show’s web site.

Wednesday, July 2nd, 2014

The Changing Face Of Chicago (1963)

You’ve no doubt seen many posts already about the 80,000 vintage newsreel type videos uploaded to You Tube by British Pathé. The biggest challenge with these is that no human being can possible process that quantity of material. But it’s fascinating and you could probably spend many a day watching these things.

I’ll share a few highlights today focused on Chicago. First, one I found via Ben Schulman. It’s a 1963 video called “The Changing Face of Chicago” and can be viewed on You Tube if the embed doesn’t display.

Listening to the narrator brag about the “27 urban renewal projects under construction” can inspire perhaps horror or laughter. But what it should spark is humility. I’ve little doubt that 50 years from now, the many earnest urbanist videos and policies put forth with equally as much dogmatic fervor and certainty will be the subject of future generations’ puzzlement. My own blog may perhaps be an exhibit.

We need to have a sense of meta-narrative about progress. By that, I mean that we not only need to understand the ways in which we’ve changed or grown vs. the past, but also keep an awareness that we’re not done yet and that in the future we will have gone beyond where we are now. We should never commit the fallacy of believing we’ve reached the apex of our understanding in the present.

Whet Moser also put together a collection of Chicago entries over at Chicago Magazine.

Here’s a fun one of his from 1939 called “Chicago Cycles.”

Here’s one from 1922 (silent) of riots in Chicago with police arresting “anarchists.”

And from the some things never change file, video of a 1938 snowstorm.

There’s plenty more so search and enjoy.

Sunday, June 29th, 2014

Columbus: Getting Fit For the Competition Ahead

This is the last of my entries prompted by my recent trip to Columbus. I’ve noted before that Columbus and Indianapolis are twin cities in many ways, though with some important differences.

One of those differences is that the civic discussion in Indianapolis today is heavily driven by the urgency of reversing the decline of Marion County as the city of Indianapolis increasingly loses out demographically and economically to its suburbs. In Columbus, by contrast, I didn’t sense nearly the same concern about suburban competition. While again I only have limited data points to go by, what conversations I did have if anything suggested to me that the city of Columbus thinks it’s holding most of the cards in the region. I suggest letting Indianapolis be a cautionary tale, and that Columbus should be much more focused on how to manage future suburban competition than it presently seems to be.

By the late 1960s Indianapolis had, like most cities, been steadily losing ground to suburban development. The response was a city-county merger called Unigov* that in effect annexed all important contemporary suburbs are well as most of the empty land that would be urbanized in the next two decades. This allowed Indianapolis to capture that suburban tax base and avoid many of the problems that plagued other older cities during the 1970s.

Fast forward to the present and it’s clear that the Unigov model is out of gas. Marion County is now largely full apart from some areas in the southern parts, and has a fairly flat growth curve in population. Most the growth is now in the collar counties. What’s more, there’s been a huge employment shift as well, with the city losing 41,000 jobs since 2000 and the suburbs gaining 78,000. I gave an overview of the dynamics in a previous post.

Today Indianapolis has a serious problem on its hand. How did this happen? It’s pretty simple. Unigov bought he city 40 years. But what did it do with that time? It built up its downtown to one of America’s best, a legitimately impressive and important accomplishment. But beyond that it was basically business as usual. Unfortunately, the 5.5 square miles of downtown can’t carry the rest of the city’s nearly 400. The city should have been aggressively preparing for the day when Unigov would reach exhaustion. But it did not.

Columbus utilized a similar technique to Unigov by aggressively annexing suburban development. And it had fairly similar results, doing well and avoiding the problems. But it seems to be widely accepted in Columbus that the city is nearing the end of its growth by annexation phase. While unlike in Indiana, Ohio makes it fairly easy to annex across county lines, and Columbus extends into multiple counties already, annexation has slowed to a crawl. In part I’m told that they are now reaching into territories that have other sources of water than the city of Columbus water utility, and thus the city has less leverage to annex than before. While technically not hemmed in, Columbus has less room for growth than before. This raises the question of when the dynamics of decline will set in within the newly stagnant city.

Columbus appears to be in better shape than Indy right now. I’d say this is for a few reasons. First, Franklin County, Columbus’ home base, is geographically bigger than Indy’s Marion County, giving Columbus a larger area of natural historic dominance. Columbus is also home to newer office/retail suburban development than Indianapolis. For example, Indy’s Keystone Crossing area is based on edge city and power center templates that are dated, while the corresponding Easton area in Columbus is newer and built to a lifestyle center type template that’s a bit more up to date. Columbus similarly has the relatively new Polaris area inside its borders.

What’s more, Columbus’ suburbs are comparatively underdeveloped and thus aren’t rivals as of yet. Indianapolis has five suburbs with more than 50,000 people – two of them with more than 80,000. Columbus has none. Only Dublin, which has 43,000 people, 9.5 million square feet of office space, and major downtown development ambitions, appears to be a full scale competitor at this point. Most other suburban municipalities are much smaller (e.g., New Albany has less than 10,000 people) and/or enclosed by the city of Columbus and thus limited in growth. Favored quarter suburban Delaware County has 185,000 people (some of which are in the city of Columbus) vs. nearly 300,000 for analogous Hamilton County, IN. What’s more, Hamilton County is far ahead in infrastructure vs. Delaware County. Delaware County has next to no upgraded east-west or “crosstown” arterials. Two reservoirs there make developing them difficult, with one of them separating I-71 from the developed parts of the county. Thus the county is even lacking in north-south “radial” movements.

These factors and others have essentially kept Columbus from facing any significant suburban competition. But unless the city wants to somehow double down on annexation and try to restart that engine, at some point these dynamics will change and the city of Columbus will find itself physically constrained and competitively disadvantaged vs. newer and now more powerfully developed suburban entities. Dublin is likely a preview of coming attractions.

I don’t have any particular policy suggestion in mind here, nor am I saying that anything the city is doing is necessarily wrong. But given what has happened in Indianapolis, I would certainly encourage the future prospect of suburban competition to be top of mind. The city of Columbus should be aggressively scenario planning for how this will play out, and use the runway that it has left to be preparing for the era of more intense intra-regional competition to come. Better to err on the side of paranoia, because the risks of waiting until you’ve got a serious problem on your hands are too high to ignore.

* Unigov also ensured a white majority in the city

Friday, June 27th, 2014

A Look At Urban Economies

A few interesting studies were recently released that I wanted to highlight. The first is from the Manhattan Institute, and is called “America’s Top Metros: Who’s Leading the Economy and Why.” It looks at recent metro area performance during the 2009-2012 period. I find this one of interest because it is balances horizontal and vertical measures of urban performance. Often people looking at cities talk past each other because some emphasize “horizontal” measures around total quantitative growth in jobs or population while others look at “vertical measures” such as per capita GDP or per capita income. This study blends both, looking at per capita GDP, per capita income, and job growth.

Maybe as a result of this balance approach, the cities doing well and doing poorly are a diverse lot without a one size fits all model. Among the commonalities they did see, they noted that successful cities tended to have higher educational attainment; a higher professional, scientific, and technical job share; more large corporate headquarters, and less dependency on government spending in an era of state and local fiscal retrenchment. Laggards suffered disproportionately from over-dependency on housing construction. The also found that while the Rust Belt was quick out of the gate as manufacturing rebounded, it’s tailed off of late, a classic pro-cyclical pattern we’ve seen before.

My favorite part is that they stress that there’s no one size fits all model, telling metro areas to “know thyself”:

Every local economy has strengths and weaknesses. Some, like taxes and regulations, can be changed by policy. But others are inherent in the nature of the place. You either have oil and gas beneath your feet, or you don’t. You may want to trade smokestacks for cutting-edge tech and “clean jobs,” but you don’t have the needed critical mass of talent, research institutions, venture capital, and entrepreneurs. On the other hand, you may be better than any other MSA at making something the nation (and world) needs: think of Grand Rapids and office furniture. Just as there is no single route to success, every community has to evaluate its existing strengths and figure out how best to draw on them for growth over the long term. Targeting an industry like technology only works for MSAs that have strength and support in that area.

The second study is from the Brookings Institution and is called “FDI in U.S. Metro Areas: The Geography of Jobs in Foreign-Owned Establishments.” As the name implies, it looks at the impact of foreign owned enterprises on large US metro areas, specifically on employment impact. This is a data rich study that for the first time I’ve seen makes information like that available.

A few highlights popped out to me. One is that new greenfield investments from foreign firms are not a net new source of jobs. Almost all of the foreign impact comes through M&A (mergers and acquisitions). Of course, subsequent to using M&A to gain a foothold in an area, possibly with job losses involved through consolidations, firms can later invest to grow their presence. Another tidbit is that manufacturing still accounts for about half of FDI investments.

Brookings basically suggests that FDI is not a panacea and probably not much effort should be expended on it as such. Rather, foreign firms are attracted by the same things as domestic ones, so by doing things such as improving infrastructure and boosting local industry clusters, FDI is then attracted.

They also highlight what I think is an important vector in FDI, namely using a foreign corporate presence to build global connectivity. As the study puts it:

In two key respects the foreignness of FDI itself is important: It brings with it exposure to new knowledge, customs, and practices, and it establishes trade and investment linkages between regions globally. In the process, FDI can increase the global fluency—which is itself an increasingly important determinant of regional competitiveness in the modern economy—of host regions. The foreignness of FDI therefore serves to integrate its host regions more fully into a rapidly globalizing economy where 85 percent of economic growth through 2019 is projected to occur outside of the United States—even if the capacity to take advantage of the opportunity varies by region.

You’ll definitely want to see where your region stands on this.

I also want to briefly point you to the Chicago Fed’s, Industrial Cities Initiative project. They just issued a major report with profiles of ten historic manufacturing cities in the Chicago Fed district, including Joliet, Fort Wayne, Racine, Green Bay, and Grand Rapids. For people in small to midsized industrial cities, this is a good resource.

Lastly, the Chicago Council on Global Affairs just released a study on Midwest immigration and how it is helping to offset aging and declining workforces in various communities. I haven’t yet had the opportunity to digest this one, but wanted to pass it along anyway.

Thursday, June 26th, 2014

The Downtown Dallas Experience

My post Sunday on Dallas in transition put the development of the metroplex into context. Today I want to zoom in and look more specifically at the experience of Dallas from the standpoint of a visitor attending a downtown event. This is a critical experience to get right because that and transiting through DFW may be the only experiences people from outside the city have with it, and it can be determinant in creating an impression.

I first visited Dallas in 2007, and gave the city’s downtown experience a failing grade, writing:

What I’m saying is not intended to be reflective of Dallas as a whole. I hear it has very nice neighborhoods, upscale shopping, excellent restaurants, etc. But based on my convention experience, Dallas is possibly the single most disappointing city I’ve ever visited.

It starts with a long, dreary, and very expensive cab ride from the airport to downtown Dallas. As if your wallet doesn’t take enough of a beating, you drive past miles and miles of sprawl hell, auto dealers, strip centers, distribution centers, fast food restaurants, etc. lining both sides of the road into town. It seems like traditional urbanity drops off very rapidly outside of downtown Dallas, only a mere mile or two from the core, replaced by older sprawl. I expect this in smaller Midwestern burgs, but not in a metro area of almost 6 million. On the plus side, this drive takes you past Texas Stadium (unimpressive unless you are a Cowboys fan) and the new American Airlines basketball arena. I thought the arena was extremely nice and the highlight of the trip. It had a retro-20′s look that was reminiscent of an old London train shed done up in red brick – and I mean that as a compliment.

Downtown is full of drab, generic skyscrapers, many lit up with neon. The hotels I saw were likewise very generic. The Convention Center itself was not easily walkable from hotels, and so it took shuttles to get there. The building is a typical hulking concrete structure. Although near the similarly uninspiring Dallas city hall, the area around it appeared to be an urban wasteland. I’ve never seen such a desolate and deserted area in such a high profile downtown area before. What’s more, it was a 4-5 block walk from there to the core of downtown.

I actually made that walk, and once you get into the center of downtown proper, there is good density, pedestrians – albeit still a shockingly small number, and even a few older buildings, though I didn’t see any truly spectacular structures. A light rail line, called DART, runs through downtown, but the station I saw was deserted, as was the train that I saw stop there. I did see a few restaurants and a Starbucks, but nothing that looked like a major entertainment district. Admittedly, I did not have a guidebook, and I didn’t have time to walk up and down every block searching for interesting things – especially not over a mile from the convention center.

Given the size and affluence of the metro area, and the good things I know from talking to others that it has, I was very surprised to see the poor face it presents to people attending conventions there. This is the only time many people will ever see the city. It’s the first and last impression many folks will ever have of Dallas.

Has Dallas improved since then? Yes, but there’s still a long way to go. I’ll walk you through the experience, along with some specific suggestions for improvement.

The trip starts at the airport. DFW is very convenient to get into and out of. I flew out of Terminal C, which is serviceable architecturally, but was overcrowded. The foodservice choices are quite poor and this is one easy upgrade area for a city that wants to be a global powerhouse. Chili’s and Friday’s ought to be there, but they aren’t enough.

The cab ride is still steep – $70 according to one person I talked to who took it – but fortunately there are now transit options, with even better service on the way. But before I get to that I’ll mention the highlight of the airport, which is their ambassador’s program. This program has volunteers in cowboy hats who help direct people where they need to go, or with anything else. I took advantage of this to get directions to the train station. This sort of super-friendly and also useful introduction to the city is actually a great first impression, and especially good because it creates a human connection to the people of Dallas.


Airport Ambassador. Image via dfwairport.com

There are two transit options. One is the DART light rail system, which stops short of the airport at this point and requires you to take two buses to get there. I’m told a direct airport stop will be available later this year. I took the Trinity Railway Express, a commuter line linking Ft. Worth with Dallas that has a stop at the airport.

tre-trinity-railway-express

You take two buses to get to the train station as well, but they are free shuttle types. The journey to the station was half an hour and the train trip only twenty minutes with a fare of $5. However, it only runs once an hour or so, so you may have a wait at a station with no services or amenities. Light rail will surely prove more popular when there’s a direct connection. I found it interesting that the train was only two cars, has a human conductor, but still uses POP. What is that conductor doing if not punching tickets?

There are a handful of stops before downtown Dallas, none of them featuring any real sort of TOD until the second to last one. The train arrives as the smallish but well maintained Union Station:

dallas-union-station

I’d originally planned to cab it from the station to my hotel, but I decided to try walking instead. Good thing I was up for that since there were no cabs. It was a 20 minute or so walk to my hotel and my original thought is that I might pop into a restaurant for lunch on the way or something. However, the only real restaurants along my path were a diner right by the train station and a McDonald’s. It was a pretty bleak walk in a blazing hot sun, but certainly most destinations can be walked from the station.

The conference I was at took place at the Winspear Opera House, which is part of the Dallas Arts District I mentioned in my previous post. They’ve got north of a billion dollars in new facilities. The Opera House is a fantastic place to hold a meeting. It seats 2,300 people, so places like this are where I’d be looking to book high end business functions like global partner meetings for prestigious firms and such. It’s a massive upgrade from the convention center. (Dallas may have improved its convention center since 2007, but I didn’t visit it). When you’re inside the opera house you certainly do feel like you’re in a real global city.

The arts district itself is a bit Lincoln Centerish. The buildings are attractive but are in a plaza style layout that you wouldn’t want to visit if you didn’t have an event there. The DMA and other visual arts institutions at one end are an exception.

flora-street

As you can see, there was no one here on the street during the day. The streets of downtown Dallas are pretty wide, with buildings that don’t address them well, and hold little pedestrian interest. I’m told most of the historic building fabric was obliterated long ago. Today’s downtown Dallas is quite a contrast with what used to be there.

Speaking of which, someone recently unearthed a video of downtown Dallas from 1939 – in color even. You can watch it on You Tube if the embed doesn’t display. The majority of the historic footage starts at 3:44.

The urban fabric of that era contrasts starkly with the city today. I’ll show a couple of examples in a moment.

Downtown Dallas has a ton of concrete and one thing they’ve focused on is creating green space in the city. Sunday I mentioned Klyde Warren Park, which is built on a freeway cap that not only provides greenery, it creates part of a link between downtown and uptown. I walked over to it and given that it was 96 degrees and the rest of the city streets were mostly empty, I expected the park to be as well, but I was wrong:

klyde-warren1

Parts of the park were empty, mostly the ones without shade. But the water park was great (and has shade as you can see) and there were places with trees, such as the spot in the background where food trucks have parked, where people were hanging out:

klyde-warren2

There are also a couple of places serving adult beverages, including this restaurant with a canopy to keep out the sun where I enjoyed a bit of relaxation and people-watching:

klyde-warren3

Klyde Warren Park is definitely a highlight, and while certainly not cheap wasn’t ridiculously expensive as urban amenities go. I think it was less than $100 million dollars, including the freeway cap structure.

There’s also been a lot of residential construction in the central area. Residential uses were previously banned in downtown Dallas, but now there’s a bit of an increase in population. One example is the 42 story Museum Tower that is in the arts district and overlooks Klyde Warren Park:

museum-tower1

So to checkpoint here, what we see is what I described previously: Dallas is putting major pieces on the board. It’s invested in the transit infrastructure, a major arts district, signature parks, and high profile residential development has started to sprout. These represent a pretty high dollar investment in stuff that a major city with aspirations mostly needs to have.

What’s missing is the connective tissue. It’s only a block or two from the arts district to Klyde Warren Park, but here’s the street you walk down:

dallas-streetscape

It’s not just that the street is wide, it features a very poor design in which the uses are incredibly inhospitable to pedestrians. This isn’t legacy either – it’s the brand new stuff. Here’s how Museum Tower addresses that street:

museum-tower2

Not good. I think we have to acknowledge that much of downtown Dallas is functionally an edge city because of designs like this. Until the designs change, there isn’t likely to be much pedestrian life.

This is where we need to take a step back and think about what Dallas needs. The streets of downtown today are clearly inhumane. However, I’m not sure the traditional urbanist prescriptions will work here. There’s a comparison of Dallas to New York in that 1939 video, and indeed the streets were bustling, but I’m not sure Dallas can ever go back to something like that.

For one thing, Dallas temperatures are very high. It was in the 90s and blazing sun every day I was there. This renders the city functionally unwalkable. I wanted to do a lot more exploring but just couldn’t because if I spent more than about 10-15 minutes outside I needed to take a shower.

When I tweeted this people kept talking about other places in the world with high temperatures. It may be that some places are acculturated to this, or too poor to afford air conditioning. But I actually didn’t even get a good counterexample once you factor in humidity. Some folks mentioned Seville, Spain, but the July dew point in Seville ranges from 51-66 while in Dallas it’s 64-72. That’s a big difference.

So walkability and urbanity is going to mean something different in a hot, Southern climate vs. northern cities. Think of that as challenge #1.

Challenge #2 is that the “everything’s bigger in Texas” approach requires modification for pedestrianization and quality of space. Richard Sennett, one of the speakers at New Cities, elsewhere observed that “When we design a street, for instance, so that buildings are set back from a street wall, the space left open in front is not truly public space. Instead, the building has been withdrawn from the street with people walking by tending to avoid these recessed spaces.”

How to fix this? In Sennett’s view it’s about scaling up from the small, not scaling down from the large. As he puts it, “I’m more interested in street furniture than starchitecture” and that one of the most interesting challenges to him is to design a “really good corner.”

Dallas is a place where whipping out the checkbook to hire a starchitect is in line with the DNA. Designing a high quality urban corner, not so much. This is why there are these fabulous major chess pieces, but the street level experience is poor.

Dallas must overcome this to realize its urban ambitions. The mark of a great city is in how it treats its ordinary spaces, not its special ones. Everybody treats the special civic spaces right. But what about the average street? What about the details of the feel of the city? This is the mark of greatness.

I suggest two steps for moving forward.

1. Create an authentic Dallas/Texas street experience. This means creating a climate appropriate design, and also figuring out how to work with, not against the culture of “bigger.”

I noticed that outdoor cafes at restaurants have misters, fans, trellises, etc. Maybe Dallas could figure out how to incorporate these sorts of designs into the streetcapes. Maybe the streets of Dallas should be colonnaded or covered with trellises full of greenery to provide shade. These structures could incorporate misters and fans or something. Implementing something unique like this at scale might be a way to channel that Texas ambition. Dallas shouldn’t be afraid to question the orthodoxy here. For example, Minneapolis has skywalks that render that downtown more pleasantly navigable during the brutal winters, even though skywalks are conventionally considered a negative. I’d look at what other cities have done. For example, study Singapore’s Orchard Road.

Secondly, channel the culture into an authentic way of expressing it with taste. At New Cities, Michael Tregoning talked about the design inspiration for the Joule Hotel as in part coming from Stanley Marcus, former chief of Dallas based Neiman Marcus. I visited the hotel and its design has a nice mix of some glitzier elements but done in a tasteful and classy way. That’s somewhat how I see Neimans, which manages to combine a bit of in your face flaunting of luxury with class and attention to details. Stanley Marcus was the first person to bring some French designers to America, for example. I suggest figuring out how to articulate and channel something like this into public space design.

So you take the Stanley Marcus approach and apply it to climate and contextually appropriate street designs, and do some pilots to figure out what works and what doesn’t. Dittos for the way buildings interact with the street. Once you nail it, then scale up, which Dallas does well.

2. Prioritize critical connective tissue. When Jeff Speck does an urban walkability plan, he maps out the high priorities corridors because you can’t fix everything at once.

I’d start with a more pleasant connection between the arts district and Klyde Warren Park, two recent major investments. Basically you want to map where people are likely to go, especially spaces between destinations where you want to get synergies or make a good first impression (such as the corridors coming out of Union Station). Improve the area around the arts district and focus on luring high end events there, and you can make a great impression on the out of towner.

To sum it up, while there have been noticeable upgrades to downtown Dallas in terms of major building blocks, the overall grade is still Incomeplete because the street level experience has not been addressed. Once that’s taken care of in at least a few zones, Dallas will present a much more impressive face to both the out of town visitor and local heading to downtown events alike.

Wednesday, June 25th, 2014

Timelapse In Lyon

Mayeul Akpovi is back with another one of his timelapse productions, this one of Lyon, France. This one is definitely for full screen high definition. If the video doesn’t display, watch on Vimeo.

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Sunday, June 22nd, 2014

Dallas: A City in Transition


Dallas Skyline. Source: Wikipedia

I was in Dallas this past week for the New Cities Summit, so it’s a good time to post an update on the city.

I don’t think many of us realize the scale to which Sunbelt mega-boomtowns like Dallas have grown. The Dallas-Ft. Worth metro area is now the fourth largest in the United States with 6.8 million people, and it continues to pile on people and jobs at a fiendish clip.

Many urbanists are not fans of DFW, and it’s easy to understand why. But I think it’s unfair to judge the quality of a city without considering where it is at in its lifecycle. Dallas has been around since the 1800s, but the metroplex is only just now starting to come into its own as a region. It is still in the hypergrowth and wealth building stage, similar to where a place like Chicago was back in the late 19th century. Unsurprisingly, filthy, crass, money-grubbing, unsophisticated Chicago did not appeal to the sophisticates of its day either. But once Chicago got rich, it decided to get classy. Its business booster class endowed first rate cultural institutions like the Art Institute, and tremendous efforts were made to upgrade the quality of the city and deal with the congestion, pollution, substandard housing, and fallout from rapid growth, which threatened to choke off the city’s future success. At some point in its journey, Chicago reached an inflection point where it transitioned to a more mature state. One can perhaps see the 1909 Burnham Plan as the best symbol of this. In addition to addressing practical concerns like street congestion, the Burnham Plan also sought to create a city that could hold its own among the world’s elite. And you’d have to argue the city largely succeeded in that vision.

The DFW area is now at that transition point. They realize that as a city they need to be about more than just growth and money making. They need to have quality and they need to address issues in the system. Much like Burnham Plan era Chicago, this perhaps makes DFW a potentially very exciting place to be. It’s not everyday when you can be part of building a new aspirational future for a city that’s already been a successful boomtown. The locals I talked to were pretty pumped about their city and where it’s going.

How true this is I don’t know, but some people have attributed a change in mindset to the loss in the competition to land Boeing’s headquarters. Boeing ended up choosing Chicago over Dallas. In part this was because Chicago bought the business with lavish subsidies that far outclassed what Dallas put on the table. But it was also because Boeing saw Chicago as a more congenial environment for global company C-suite and other top executives to be, both from a lifestyle perspective and that of access to other globally elite firms and workers available in Chicago.

Meanwhile, the cracks in the DFW growth model were becoming apparent, especially in the core city of Dallas. Ten years ago the Dallas Morning News ran a series called “Dallas at a Tipping Point: A Roadmap For Renewal.” This series was underpinned by a report prepared by the consulting firm Booz Allen. This report is well worth reading by almost anyone today as it is a rare example of a city that was able to get insight and recommendations from the type of tier one strategy firm used by major corporations. Booz Allen was direct in their findings, though perhaps with a bit of hyperbole in the Detroit comparison:

Dallas stands at the verge of entering a cycle of decline…On its current path, Dallas will, in the next 20 years, go the way of declining cities like Detroit – a hollow core abandoned by the middle class and surrounded by suburbs that outperform the city but inevitably are dragged down by it.
….
If the City of Dallas were a corporate client, we would note that it has fallen significantly behind its competitors. We would warn that its product offering is becoming less and less compelling to its core group of target customers…We would further caution the management that they are in an especially dangerous position because overall growth in the market…is masking the depth of its underlying problems. We would explain that in our experience, companies in fast growing markets are often those most at risk because they frequently do not realize they are falling behind until the situation is irreversible.

Put into the language of business, we would note that Dallas is under-investing in its core product, has not embraced best practices throughout its management or operations, and is fast becoming burdened by long term liabilities that could bankrupt the company if the market takes a downturn.

The city responded in a number of ways, some of which were similar to Chicago at its inflection point. Many of these involve various urbanist “best practices” or conventional wisdom type trends.

By far the most important of these was adopting modern statistically driven policing approaches. As crime plummeted in places like New York during the 1990s, Dallas did not see a decline of its own. But with the expansion of police headcount and adoption of new strategies by new police chief David Kunkle in 2004 – and no doubt some help from national trends – crime fell steeply during the 2000s. The Dallas Morning News says that the city’s violent and property crime rates fell by a greater percentage than any other city with over one million residents over the last decade. In 2013, Dallas had its overall lowest crime rate in 47 years.

This is critical because nothing else matters without safe streets. I’ve had many a jousting match with other urbanists on discussion boards about where crime falls on the list of priorities. In my view it’s clearly #1 – even more so than education. It’s simply a prerequisite to almost any other systemic good happening in your cities. Students can’t learn effectively if they live and attend school in dangerous environments, for example. NYU economist Paul Romer made this point forcefully in his New Cities keynote, saying that fighting crime is the most important function of government and that if you don’t deliver on crime control your city will go into decline. Fortunately, Dallas seems to have gotten the message.

But there’s been attention to physical infrastructure as well. The area has built America’s largest light rail system (which was in the works since the early 1980s).


Dallas Area Rapid Transit (DART) light rail train. Source: Wikipedia

Both the city and region remain fundamentally auto-centric, however, and this is unlikely to change.

There’s been a significant investment in quality green spaces. A major initiative called the Trinity River Project is designed to reclaim the Trinity River corridor through the city as a recreational amenity. This is underway but proceeding slowing. Among the aspects of the project is a series of three planned signature bridges designed by Santiago Calatrava. The only one completed is the Margaret Hunt Hill Bridge.


The Margaret Hunt Hill Bridge in Downtown Dallas. Designed by Santiago Calatrava. Source: Wikipedia

The single bridge tower is quite an imposing presence on the skyline. However, the size of the bridge creates an awkward contrast with the glorified creek that is the Trinity River. It looks to me like they significantly over-engineered what should have been a fairly straightforward flood plain to span just so they could create a major structure.

Another green space project – and the best thing I saw in my trip to Dallas – is Klyde Warren Park, which is built on a freeway cap. About half the cost came from $50 million donations. I’ll be going into more detail on this in my next installment, but here’s a teaser photo:


Klyde Warren Park. Source: Wikipedia

The Calatrava bridge shows that Dallas has embraced the starchitect trend. This was also on display in the creation of the Dallas Arts District. Complementing the Dallas Museum of Art are a billion dollars worth of starchitect designed facilities including Renzo Piano’s Nasher Sculpture Center, IM Pei’s symphony center, Norman Foster’s Winspear Opera House, and OMA’s Wyly Theatre.


Dee and Charles Wyly Theatre. Designed by OMA’s Joshua Prince-Ramus (partner in charge) and Rem Koolhaas

This arts district – which naturally Dallas boasts is the world’s largest – along with the other major investments that were funded with significant private contributions show a major advantage Texas metros like DFW and Houston have: philanthropy. These are new money towns on their way up and local billionaires are willing to open their wallets bigtime in an attempt to realize world class ambitions, exactly the way Chicago’s did all those decades back.

By contrast many northern tier cities are dependent on legacy philanthropy, such as foundations set up in an era when they were industrial power houses. This is a dwindling inheritance. What’s more, what wealthy residents they do have are as likely to be taking money out of their cities through cash for cronies projects than they are to be putting it in. Thus they can be a negative not positive influence.

This shows the importance of wealth building in cities. Commercial endeavors can appear crass or greedy at times, and deservedly so. But without wealth, you can’t afford to do anything. There’s a reason Dallas could build America’s largest light rail system – it had the money to do so. Similarly with this performing arts district. To be a city of ambition requires that a place also be an engine of wealth generation.

I’m sure that Dallas’ moneyed elite are well taken care of locally and exert outsized influence on decision making. I don’t want to make them out to be puristic altruists. But they’ve shown they are willing to open their wallets in a serious way, something that’s not true everywhere.

This is a flavor of what Dallas has been up to. It’s too early to say whether the city will make the same transition Chicago did. Its greatest challenge also awaits some time in the future. When DFW’s hypergrowth phase ends and the city must, like New York and Chicago before it, reinvent itself for a new age, that’s when we will find out if DFW has what it takes to join the world’s elite, or whether it will fade like a flower as Detroit and so many other places did.

Toyota did just announce it’s moving 3,500 jobs to north suburban Plano. But corporations have long seen Dallas a place for large white collar operations. Boeing was what I call an “executive headquarters” – a fairly small operation consisting of only the most senior people. I haven’t seen Dallas win any of these as of yet.

The Dallas Morning News takes a somewhat mixed view on the city itself. They just did a special section called “Future Dallas: Making Strides, Facing Challenges,” the title of which sums it up. Dallas has put a lot of pieces on the board and made major progress on areas like crime, but it’s failed to make a dent in others, such as Booz Allen’s call to make the city more attractive to middle class families. Poverty is actually up since then, and the city is increasingly unequal in its income distribution. Dallas is not unique in that, but that’s cold comfort.

Despite gigantic regional growth, the city’s population has been nearly flat. Despite the vaunted Texas and DFW jobs engine, Dallas County has lost about 100,000 jobs since 2000. The core is clearly continuing in relative decline, and the Dallas County job losses are particularly troubling. I’m no believer in this idea that everybody is going to abandon the suburbs and head back to the city. But as former Indianapolis Mayor Bill Hudnut put it, you can’t be a suburb of nowhere. If the core loses economic vitality, the entire DFW regional will take a hit to its growth.

I highlighted some of what Dallas has accomplished recently, as well as continued areas of concern. On Thursday I’ll be back with another installment taking at look at downtown and the visitor experience.

Friday, June 20th, 2014

Disrupting the Disruptors

Jill Lepore’s attack on “disruption” and on Clayton Christensen’s “innovator’s dilemma” model of industry dynamics in the New Yorker kicked up quite a stir. Called “The Disruption Machine: What the gospel of innovation gets wrong,” Lehore lays out a multifaceted skeptical case against the notion of disruption. Her piece combines several different arguments together without clearly distinguishing them, but I identify four basic questions she attempts to answer:

1. Does disruptive innovation exist, at least as a model for understanding industries?
2. Can incumbents successfully respond to a disruptive innovation?
3. Can disruptive innovations be identified prospectively or only retrospectively?
4. Are disruptive innovations net beneficial to society?

I’ll start by observing that she twice references traditional print journalism incumbents as examples. One is the New York Times innovation strategy, which makes explicit reference to Christensen’s theory. The second is when she talks about the public interest rationale for the separation of business and editorial in the traditional news business, making reference to both the NYT and the New Yorker.

This explicit link to journalism, along with the general tone of offense that pervade the article, betrays something more than a professional interest in the topic. Indeed, she’s hardly a neutral observer as her paycheck in part comes from an industry that’s being disrupted (she’s also a Harvard professor). The impression I get once again is of someone in deep love with the culture and traditions of her trade, something I’ve noticed over and over again in the incredible resistance and even hostility newsrooms have shown over the last decade or so to change and innovation. There’s a reason that people who experience an involuntary rupture can often never get over it. There’s a reason, after all, the Israelites who saw the miracles in Egypt never got to enter the Promised Land.

This points to a legitimate add on to Christensen’s theory. He views the innovator’s dilemma as purely about logical business decisions. But he overlooks the cultural aspects. The culture of firms emerging from traditional business practices are resistant to change because legacy practices are part of the core value set, maybe only implicitly. I lived it. I started out after school doing IT consulting where we operated in an onsite, onshore model in a traditional “mountain moving” operating style. The switch to global delivery in response to upstarts from places like India disrupted that way of doing business. And while I enjoy aspects of global and remote site delivery and successful ran projects using the model, I never had the love for it that I did for the first one. I still have a nostalgia for the “good old days.” So I can relate myself.

In this sense I think we should see the piece as written by someone who is party to the phenomenon in question, and perhaps as an expression of some of her own personal angst on the topic.

With that let me attempt to address her questions.

1. Does disruptive innovation exist, at least as a model for understanding industries? Lepore says No, and that Christensen’s model is based on flawed case studies. I personally have some sympathy for this argument. She correctly notes that “disruptive innovation” is a sort of modern gloss on Schumpeter’s “creative destruction.” Certainly in the real world theoretical abstractions like this are seldom seen in a clean or pure form.

But there’s a long way between critiquing Christensen’s theory as a model of understanding firms and industries, and critiquing the idea of a disruptive innovation itself. All of us can take a look around and see the digital technology has radically disrupted the newspapers, the music industry, fixed line telephony, etc. It’s obvious. Disruptive innovation is trivial to see all around us.

2. Can incumbents successfully respond to disruptive innovations? Lepore says Yes and I agree. Clearly disruptive innovation is not a death sentence for a company. But what we see is that disruption often triggers an industry shakeout, and while often the top players survive and come through stronger, weaker players fail or consolidated away.

Consider the mainframe industry back in the day, with “IBM and the Seven Dwarves.” Minicomputers and PCs disrupted that old business. IBM is still alive and kicking – and even still making money off mainframes. Basically everybody else is out of the business or selling IBM clone stuff. Sperry and Burroughs, for example, merged to form Unisys. Unisys is still around as a company, but they are no longer a mainframe firm. They are now basically an IT services company. That’s a success story as far as it goes. Many of the other players are dead or completely flushed out of the industry.

We’re seeing the same thing in newspapers. The Wall Street Journal seems to be adapting. The New York Times is holding its own as well. It may well be that ten years from now the NYT and Journal are stronger than ever. We already see that the NYT is a national paper in the way that it never used to be, for example. But your local newspaper, now likely owned by a chain like Gannett, is already a zombie that’s probably not even worth reading today.

So just because some firms survive and even become more dominant, doesn’t mean a disruptive innovation doesn’t have profound industry effects.

3. Can disruptive innovations be identified prospectively or only retrospectively? Lepore cities Christensen’s investment fund failure here, and I’d have to agree that predicting the future is hard. Even the best venture capitalists are looking for the minority of grand slam investments and know most of their bets won’t really pan out. Just having a theory doesn’t necessarily mean you can profit from it as we know.

4. Are disruptive innovations net beneficial to society? Here’s where Lepore makes her most explicit defense of the present model of journalism, saying:

It’s readily apparent that, in a democracy, the important business interests of institutions like the press might at times conflict with what became known as the “public interest.” That’s why, a very long time ago, newspapers like the Times and magazines like this one established a wall of separation between the editorial side of affairs and the business side. (The metaphor is to the Jeffersonian wall between church and state.) “The wall dividing the newsroom and business side has served The Times well for decades,” according to the Times’ Innovation Report, “allowing one side to focus on readers and the other to focus on advertisers,” as if this had been, all along, simply a matter of office efficiency. But the notion of a wall should be abandoned, according to the report, because it has “hidden costs” that thwart innovation. Earlier this year, the Times tried to recruit, as its new head of audience development, Michael Wertheim, the former head of promotion at the disruptive media outfit Upworthy. Wertheim turned the Times job down, citing its wall as too big an obstacle to disruptive innovation.

Here I think Lepore mixed disruptive innovation as a theory of industrial change and disruptive innovation as a theory of value. The championing of “disruption” by the tech crowd obviously grates, as well it should. She sees that the thesis of investment for many tech firms is about mutilating existing industries and capturing all the value, heedless of what non-monetary values (or human costs) might result.

I think there’s something to this. I tend to take a Burkean view of institutions in which we have values that are invisibly embedded in them that are in a sense critical to the healthy functioning of our society, and we tamper with them at our peril. When we impose radical change rather than relying on organic evolution, the law of unintended consequences is sure to kick in at some point. Today’s Randian entrepreneurs are hardly the only ones who want radical change, however. Radical social reformers of various stripes have tried to radically remake societies (say Karl Marx or the French Revolutionaries) with similar disregard or even contempt for what would be lost.

Lepore actually makes this point implicitly when she links contemporary business school thinking to the decline of faith, saying, “Faith in disruption is the best illustration, and the worst case, of a larger historical transformation having to do with secularization, and what happens when the invisible hand replaces the hand of God as explanation and justification.”

She in a sense argues that we shouldn’t just equate change with progress. In that regard, I think of disruptive innovation as similar to the “paradigm shift” model from Thomas Kuhn’s The Structure of Scientific Revolutions. A paradigm shift is a move from something like Newtonian to Einsteinian physics. As a practitioner of the history and philosophy of science, Kuhn critiqued the notion that these paradigms shifts represented progress towards knowledge of the ultimate truths. In fact, a paradigm shift could easily result in a decline of explanatory power in some cases, a phenomenon known as “Kuhnian loss.” For Kuhn, scientific change wasn’t necessarily progress towards truth as such.

I think it is similar to evolution, an analog Lepore rejects because she believes disruptive innovation theory engages in circular logic. But evolution proceeds on a similar logic. I think her real critique is that she sees evolution as producing genuine progress while disruptive innovation is fake progress. But evolution, like disruptive innovation or paradigms, has no inherent concept of progress. Mankind is not a the apex of evolution compared to an amoeba simply because we came along later and are more complex. There’s no guarantee we will we not find homo sapiens “disrupted” at some point in favor of the proverbial cockroach or something.

So I agree there can be genuine loss, and self-interested tech advocates aside, I don’t even see disruptive innovation as promising progress on every dimension. It’s a theory of business.

The problem is that not only is there a sort of Kuhnian loss from innovation, as with paradigm shifts you can’t escape it by refusing to participate. A scientists who sticks with the old paradigm when the new is accepted ends up no longer in a sense a scientist, as normal science takes place within a paradigm, or shared set of assumptions and models about how the world works.

Similarly, I may like physical newspapers, but that doesn’t mean I’ll be able to keep reading one forever. The disruption that’s hitting that industry will likely make it impossible some day. The joy I get from print will be lost, even though I may get many benefits from digital, not least of which the potential to have a platform like this one. My firm couldn’t just keep doing IT systems they development the way it used to; it would have gone out of business. We are deprived of the choice to stay the same.

Prior to the 1970s, we used regulation to try to manage the process of destruction by innovation by in a sense outlawing it. Telephony has probably changed more from a consumer perspective since the 1984 AT&T breakup than it did in the entire period previous to that back to Alexander Graham Bell, for example. Are we better off or worse off? As a society, we’ve clearly embedded a deregulating principle into our approach. This prioritizes dynamism and change, and treats the losses as acceptable. One can debate whether this is the right principle or not. But let us not pretend that we don’t have trade-offs to make.

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