Over at All About Cities, Wendy Waters asks: "Do corporate headquarters still matter?" writing that:
For years now, Vancouver has seen the number of corporate head offices in the city decline. The business community and some politicians have become pre-occupied with the issue. Many are demanding that something be done to lure new head offices or keep the ones Vancouver has. Similar questions are no doubt being raised in many medium sized cities around the world. But, the more I think about it, the more I question whether this the right issue for a city like Vancouver to be worried about in the global economy of the 21st Century? I've been trying to find out if head office losses are issues to other cities. Montreal is an interesting study I'll blog about soon. I'd love tips from readers on other cities dealing with this question -- and I wouldn't mind hearing what Richard Florida has to say about it either... More here.
I think she's onto something. Obviously being a headquarters location was a big deal back on the hey-day of the Industrial Age. Many of you may be too young to remember, but the old way business magazines used to rank cities was with annual lists of the number of headquarters. I haven't even seen one of these lists in a long while.
It also seems to me that headquarters are involved in pretty massive relocation in line with the basic demographic changes and talent flows that are reshaping domestic and national economies. Second-tier cities are losing headquarters to first-tier cities for these reasons. Even a great city like Seattle lost Boeing to Chicago. Of course there are counter-examples, there always are, but this is the main trend. The main reason is access to huge amounts of talent, especially when that talent is both concentrated and highly mobile not only between places but between jobs. If you want access to talent, you need to and have to be in a center, end of story.
Here's one for you: How long do you think it will be before at least one of the Big Three moves out of Detroit? The factories have been migrating away for a long time. Interestingly though, the mass relocation of manufacturing out of the old industrial belt, long seen to be the "solution" to the problem by management, has really not solved anything; the companies continue to hemorrhage. The underlying problem has always been the same--outmoded, old-school, incompetent management. If I see this, some outside investor has to see it. Why not move GM or Ford to CHICAGO: it would clear out the ranks of deadwood management and provide a whole new talent pool from which to draw. Apologies for the digression, but you can see the main point.
For second tier cities, the issue is to understand and leverage their creative economy. In Montreal, where I worked with Catalytix, that means self-generating creative companies like Cirque de Soleil, working to improve technology, deepening connections to its great universities, continuing to leverage the music and artistic scenes, and taking advantage of affordable housing. (Our report is here). In Vancouver, it means some of the same things, plus tightening linkages to Seattle (Cascadia according to our research is one of the most innovative Mega-regions in the world), continuing to be open and attract immigrants, and emphasizing quality of life.
Wendy also asked me about Pittsburgh a city which was hit harder in the 1980s than virtually any other. The first thing the community did right was create the "image" of transformation. Right away, it promoted the image of change from a steel town toward high-tech, robotics and its renaissance. Hype, you say: sure. But it worked as a short term strategy to change the city's global image. Heck, I moved there in the thick of it. Compare to Detroit today which has not done much if anything to create an image of change and transformation..
The second thing it did was stabilize its and neighborhoods. The great legacy and learning from Pittsburgh is this. It gave rise to one of the best neighborhood-led community development transformations in the world. I've said it before and I'll say it again: the places that are thriving in Pittsburgh are the ones which were spared the heavy hand of local urban renewal schemes.
What's hurt Pittsburgh and held it back from even greater things is its constipated, out-of-touch, old-boy leadership. The modern version of the once-heralded marriage between Lawrence (the mayor) and Mellon (the corporate titan) -the relationship between the corrupt political machine and incompetent corporate leadership (the Allegheny Conference)- has become the region's albatross, squelching all sorts of positive change and creativity. You should have heard Jane Jacobs go on about that. A quick aside: when a very close friend asked a high-ranking Allegheny official about the need to involve citizens and people in Pittsburgh's ongoing transformation, that person replied more or less: "We just do that to placate folks; We already know what we're going to do." Need I say more. Once the city and region shuck that off, its conditions will improve still further. It has all the assets needed to compete- from great neighborhoods to great universities. But leadership needs to chart a vision that excites people and enables them connect to these and other assets and use them in new ways.
It can be done. There are lot's of examples of older cities that have done just this. Chicago may be the best one, using a mix of strategies to leverage business, universities, arts and culture and open-mindedness and tolerance as a strategy to become a magnet for talent and investment. Providence, a much smaller city, has developed an impressive strategy to leverage its housing cost differential, quality of life, universities and colleges, and quality of life. Baltimore, under Martin OMalley's leadership, shows that an older industrial city with deep social and economic problems can turn around by directly recruiting talent (from the DC area), investing in its arts and culture scene, and developing closer ties to its universities.
But it takes real leadership. What separates Chicago, Providence and Baltimore from Pittsburgh and Detroit, in my mind, is just this. And it need not be yuppie leadership. Chicago did it with Daley's son at the helm. Providence did it with Buddy Cianci, now doing time in federal prison, though they now have the openly gay David Ciciline as mayor. Detroit suffers from out of touch corporate leadership and a split between suburbs and city that is truly frightening. I always say it amazes me that the region can squander the talent of Kwame Kirpatrick and launch a full-fledged attack on him, when to my mind he may well be the smartest and most charismatic young African American leader on the scene today. The key to Detroit's future is not to retain its headquarters, but figuring out how to capitalize on the energy of its mayor; leveraging the long history of musical innovation; and once and for all seeing Ann Arbor and the University of Michigan, arguably the greatest research university in the world, an source of incredible talent and technology, and not the auto industry, as the center-piece of its economic development effort.
To my mind, what cities today need is not more corporate headquarters. In fact to answer Wendy, cities like Detroit may well be better off when the old-boys leave town, finally opening up space for new ideas and new leadership. What cities today need is visionary and forward-looking leadership that can embrace and extend the benefits of the Creative Economy, tapping the creative energy of their many and varied institutions from universities to startups and the music, art and design scenes, and unleashing the incredible creative energy of their people.
I've laid it on the line. What do you think?