Becoming a 'Brain Belt' starts with smart collaboration

By Chris Jenkins - Communications Director, MMAC

When economist Antoine van Agtmael began studying the evolution of industrial cities around the world for the 2016 book he co-authored, “The Smartest Places on Earth,” he took a look at Milwaukee.

Spoiler alert: We didn’t quite make the cut the first time around.

At the time, our region had several of the ingredients needed to make the transformation from a former rust belt city into what van Agtmael and co-author Fred Bakker are calling a “brain belt” — an emerging hotspot for innovation. Milwaukee’s existing ingredients included a significant presence of large companies who emphasize research and development, several institutions of higher education and a livable city filled with cultural attractions and character.

Since then, Milwaukee has made incremental gains in some the things van Agtmael thought were missing at the time they were doing research for the book, including an increased presence of startups and startup incubators, the availability of venture capital and increased university research activity. Add in one big seismic shift – the arrival of Foxconn – and van Agtmael, who coined the term “emerging markets,” is tempted to take another look at Milwaukee.

“The idea that it could be one of the next in tech makes sense,” van Agtmael says.

But the continued growth and development of all those ingredients alone doesn’t guarantee Milwaukee’s future success as a destination for innovation. The main takeaway from van Agtmael’s book is that it’s not enough to simply have legacy companies, startups and universities. For a city or region to fully transform, these entities must connect and work together. “Brain belts” form around smart collaboration.

“I would love to come to Milwaukee, because it sounds like it has a lot of the elements,” van Agtmael says, in an interview.

A similar thought has occurred to Joe Scanlin, the founder of startup smart-floor designer Scanalytics (see story, p. 20). Scanlin believes both startups and big legacy companies would benefit greatly if they collaborated more than they did back when he was starting his company in 2012.

“When we were going through (the startup process), there was less involvement from local larger companies,” Scanlin says. “I think that’s better today. But I think that could still be improved. At the end of the day, a lot of the experiments that some of these companies are going through is likely far more expensive than if they did that experiment with a startup.”

Sharing over secrecy

Traditionally, large companies have closely guarded their research and development efforts. They might engage with universities for research, but not without mountains of nondisclosure agreements and tight control of proprietary technology. But the regional success stories that van Agtmael and Bakker highlight in their book involve a different approach: One where companies prioritize collaboration over keeping things secret, connecting with universities, startups and even other big companies in their research efforts.

One example they cite is Albany, N.Y., where a nanotechnology initiative at SUNY Polytechnic Institute started with an ambitious goal: Challenging Asian firms’ domination of the microchip industry. The university eventually attracted research support from firms such as IBM, Intel, Nikon, Samsung and others.

Together, these companies could invest jointly in billions of dollars’ worth of equipment and research that might not have been realistic within any one individual company’s budget. By working in conjunction with a university, van Agtmael says, they could do so without fear of antitrust scrutiny. An incubator of startups and spinoffs developed from there.

Van Agtmael and Bakker found several similar stories around the world, from Akron, Ohio to Dresden, Germany.

There are signs that Milwaukee is warming up to this mindset. One example of collaboration can be found in The Commons, which brings together college students from around the region, connects them with the local innovation economy

and gives them the chance to work with industry partners on real-world projects.

Another example can be found in the June 2018 announcement of the Northwestern Mutual Data Science Institute, a collaboration between the 160-year-old financial security giant, Marquette University and the University of Wisconsin-Milwaukee intended to increase Milwaukee’s presence and develop talent in the emerging field of data science. (see story, p. 18.)

“That’s exactly the kind of thing I was thinking of,” van Agtmael says. “The fact that you have incubators now, the fact that there’s some venture capital, is positive.”

Working together to grow the talent pool

Another example launched in November 2018, when ManpowerGroup, Rockwell Automation and the Milwaukee 7 regional economic development partnership brought together manufacturing leaders from around the region to begin working on long-term solutions to the “talent gap,” projections that say our region will have more jobs available than skilled advanced manufacturing workers to fill those jobs over the next several years.

Companies would still compete with one another to hire the best employees. But in this initiative, they hope to grow the overall talent pool they’re all drawing from. And if it works in Milwaukee’s manufacturing industry, it could serve as a model for other industries to follow.

Van Agtmael says these kinds of connections don’t happen without charismatic, credible leaders — people he refers to in his book as connectors: “Someone who takes the bull by the horns and basically has convening power and can get these various people together – the people at universities, the companies, etc. – and have them work together.”

Startups as laboratories

David Zach’s academic training is as a futurist, but he’ll be the first person to tell you that he doesn’t have a crystal ball.

Zach, who will speak at the Wisconsin Economic Development Commission Governor’s Conference in February 2019, has a few educated guesses at what will drive the economy of the future, including artificial intelligence, nanotechnology and blockchain technology. But what he wants to see happen right now is for Milwaukee to establish more pathways for the next big idea – whatever it is – to grow.

“Rather than predict the future – what do we do now to enable more opportunities for the future to find itself?” he asks.

More pathways will help form new connections

“Our ability to connect people, things and ideas — especially people, things and ideas that at first glance weren’t connectable — that’s how you create wealth,” Zach says. “That’s how you create value.”

Zach notes that Allen-Bradley started with two guys, Harley-Davidson with three. How can we ensure the next small group of people with a big idea has a chance?

As someone who made it through the initial startup phase, Scanlin has some ideas. He’d like to see more capital flowing to startups, and support startups not just in the early and late stages, but at all the critical stages in between.

“I think that the work ethic and the feeling of community is here,” Scanlin says. “We just need to find ways to understand first, and then support, the different stages of companies as they continue to grow.”

Scanlin says Milwaukee’s large companies can help – and benefit in the process – by partnering with

startups. If an idea works, you’ll know more quickly... and if it doesn’t work, you’ll also know more quickly. There’s value in both.

“That relationship also helps a startup figure out its fate maybe sooner than later,” Scanlin says. “Worse than dying is being a zombie company. I think the shorter the feedback loop by working with corporates, the better. We have that capability. We have plenty of large companies here that could help do that across many different segments.”

Foxconn as a catalyst

After founding Emerging Markets Management in the late 1980s, van Agtmael’s firm made an investment in Hon Hai Precision Industry Co. Or, as just about everybody in Wisconsin knows it as now, Foxconn. He remains an admirer of the company and its chairman, Terry Gou.

“They are very, very good,” van Agtmael says. “They are the best operators in the electronics world, and that shows up in terms of their clients.”

Van Agtmael sees Foxconn’s decision to build in Wisconsin as a validation of the overall climate for business, everything from the economic environment to logistics.

“With companies like Astronautics Corp. of America, Brady Corporation, Johnson Controls, ManpowerGroup, Rockwell Automation, there’s a base there that (Foxconn) can build on,” van Agtmael says. “It’s not like going into the boonies. The fact that they’re coming and building a plant is a big plus.”

Years before the Mount Pleasant-based plant churns out its first device, Foxconn executives started connecting with universities and technical colleges on talent development and research projects. It’s a first step, perhaps, toward the formation of a “digital ecosystem” – a term we should start becoming familiar with. Todd McLees, the founder and managing partner at Pendio Group in Milwaukee, sees the arrival of Foxconn as a pivotal moment that will benefit Wisconsin well beyond the establishment of a traditional supply chain (see story, p. 12.)

“Truly effective ecosystems turn customers and competitors into collaborators,” he says. “One measure of Foxconn's impact in the region is how well they can help their customers, suppliers, and partners innovate.”

Collaboration beyond borders

This spirit of smart collaboration can flow across state borders and other political boundaries. Kelly O’Brien says it must.

O’Brien is the president and CEO of the Alliance for Regional Development, which advocates for business and political leaders to envision Southeastern Wisconsin, Chicagoland and Northwestern Indiana not as three separate places, but as one economic engine that should work together to reach its potential (see story, p. 16.)

“Working together can bring benefits,” O’Brien says. “We need to continue to remind our elected officials that although their fiduciary duty is to their state, county or city, that the state, county or city will benefit by working across state lines. It is so critical that we break down those barriers.”

The Alliance launched in the wake of a 2012 study by the Paris-based Organisation for Economic Cooperation and Development that looked at opportunities within the “megaregion.” After meeting initial resistance, the Alliance has made progress in promoting this mindset. But there is far more work to be done, from increasing university research activity to attracting talented new residents.

“As a mega-region, we need to address our population and make sure that we are continuing attract people and ensure they want to stay living in this region,” O’Brien says. “It’s critical that we have a solid, strong population. That’s how we attract businesses.”

We do, however, have an ace up our sleeve: A location in the center of the country with established transportation hubs and reliable access to fresh water.

“As impossible as it is to know what (the next) 20 years will look like, assets like where we’re geographically located are not going to change,” O’Brien says. “So we need to make sure we are really at the table, understanding when and how we can be the best we can be.”

How do we get there?

For Zach, the first step toward a more collaborative future might be as simple as not eating lunch at your desk. “There is no reason why we can’t do this,” Zach says. “But people have to be a lot less self-focused. Less tribal. Less partisan. One of our greatest abilities is to find common ground. And I think more people need to go out for breakfast and lunch – when you break bread, you break barriers.”

And no matter how much new development occurs in Milwaukee, Zach says we should be careful not to lose our sense of place.

“Young people today don’t want dream homes. They want dream neighborhoods,” Zach says. “I think that is something that the city has to recognize. And it has to be organic. A successful neighborhood is based on trust, and trust is one of the things you cannot automate and you cannot outsource.”

And while van Agtmael hasn’t visited – not yet, anyway – he hears good things about Milwaukee’s enjoyable, affordable and authentic culture. It’s one of the main reasons he says Milwaukee can make a transformation.

“There are places where I would say it’s better to move (away from), and there are places where I say go for it,” van Agtmael says. “Milwaukee is one of these places where I would say go for it.”

But, he adds, “You have your work cut out for you.”