The Imbalance of Innovation Growth

The Imbalance of Innovation Growth

The December white paper issued by Information Technology and Innovation Foundation & The Brookings Institution has, thankfully, been getting a lot of national attention and represents the next chapter in our country’s economic history. The bad news? 90% of innovation employment growth in the last 15 years was generated in just five major coastal cities: Seattle, Boston, San Francisco, San Diego, and San Jose. This concentration is not only risky for the country, it completely discounts the invention and technical talent in the middle part of the country. Progressive companies (Google, Microsoft, etc.) are catching on and expanding offices in urban markets in the middle U.S. as industry and government slowly come to realize that they’ll be left behind without an aggressive innovation economic development strategy. Those that move quickly and rally the leadership and resources required to be competitive in the tech talent arena will be rewarded exponentially. Just ask St. Louis, Nashville, Austin, Madison, Charleston, Phoenix, Las Vegas…

https://www.washingtonpost.com/business/2020/02/28/midsize-vs-metropolitan-cities/

 

Why the Midwest?

Why the Midwest?

Why will the Midwest experience an economic renaissance through tech? While there is trepidation and concern around the evolution of manufacturing and the rise of a new economic era, there is also excitement within the region. My conversations with numerous employees and industry leaders in the Midwest illuminate a clear intention to evolve Midwestern culture to embrace innovation. The time is ripe for this cultural shift for three main reasons: regional timing, capital efficiency, and grit.
As we’ve seen throughout history, the Midwest has successfully been able to shift into different economic models. In the 1800’s, the Midwest established itself as a farming and agricultural region. During and after the Industrial Revolution, they successfully added, and some shifted, to become a leader in manufacturing as well. However, what most don’t know is that in the last thirty years, the United States has lost five million jobs in the manufacturing sector. This translates to five million families– many concentrated in the Midwest– that have become severely impacted and essentially lost the very simple promise that was emblematic of that era. The promise that if you work hard, you can support your family and live a happy life.

As opportunities in manufacturing have become more and more scarce, there is an overwhelming recognition in the Midwest that it is time for another industry to come forward. Midwesterners are not ready to give up. They are ready for another industry change – a shift. They are ready for tech. The timing in the region is right for a significant economic shift.

So who will lead the Midwest into this new era of tech and innovation? We are going to need cities and companies to lead people through the transformation and evolution of the region. Already, we have multiple cities in the Midwest that will step forward sooner rather than later. Milwaukee, Detroit, and Cincinnati are all stepping forward as innovative economic leaders in the Midwest. Numerous corporations in these states are investing millions of dollars in early stage tech companies both inside and outside their state, utilizing new investment models, including the Fund of Funds approach. These new approaches are the perfect example and a clear signal that the Midwest is ready to make change. They have all of the pieces needed — including grit and capital efficiency — two other critical factors setting the stage for the tech evolution in the Midwest.