Today the San Francisco Chronicle reported that over 45% of North American investment in green technology last year landed in California. Of the $3.95 billion invested, $1.79 billion went to firms in the Golden State. That is pretty incredible, given that California's population is roughly 10% of the U.S. and Canada. Can other places improve their fortunes and grab a larger piece of the somewhat finite investement pie?
On one hand, it's great to see Silicon Valley and the rest of the Golden State turn so adeptly on a dime after the tech downturn and strike it rich on new technology. On the other hand, it seems somewhat unfair that the rest of North America must scrape for the leftovers. My current home, the historically auto-centric State of Michigan, is a prime example of a place left out in the cold for growth industries like green tech - or Linux, biotech, etc. What should a state that is Michigan do to seize the future and get out of the doldrums?
Trying to out-Valley Silicon Valley is probably unrealistic. The magnet that is Silicon Valley exists for many reasons, but perhaps most significantly since it's simply the original 'place to be' regarding IT. So many other people - from environmentalists to gays, free spirits, bohemians, drifters, organic-food fanatics, etc. - emigrated from their stifling hometowns to the 'just gotta be me' Bay Area, and IT is no exception. I am open to debate on this, but I doubt that the entrepreneurial culture, venture-capital firms and the unparalleled array of tech firms came about from ads in Chamber of Commerce Monthly.
Perhaps the solution for Michigan is to be smarter and think long term. In my view, in order to join the ranks forward-looking, 21st Century economies, the state has many deficits to erase, such as a negative 'rustbelt' reputation, low educational levels of its citizens, a welfare-like dependence on the auto industry and lack of an entrepreneurial culture. Meanwhile, the state has advantages such as great universities, engineering talent and surplus manufacturing capacity. Why not build solar arrays and wind turbines in those shuttered factories?.
Here are some ideas that might help improve Michigan's chances:
Promote a home-grown, open-source industry
Yes, I bring up this idea to foster a home-grown open-source industry because I am a geek, but I truly think it makes sense. In countries such as India and Brazil, leaders have seen the value of promoting local solutions that not only decrease their dependence on Microsoft but also improve local expertise and create more jobs. Why can't a state or region develop its own economy as such, too? Start by promoting open-source solutions and open file formats in all levels of government, including schools. Follow up by offering students courses and degrees that give them the skills to compete to create those solutions.
Outside of the geek realm, seek other local solutions. Take the City of Chicago, which has policies for turning itself green - literally! For instance, the city mandated an increase in green space, which is to be inhabited by more native plant species from local suppliers. What happened? Suddenly you have many new, agile, local companies (and jobs) with expertise in planting and tending native plants.
Invest in people and give them a reason to stay
Due to its dependence on the auto industry, it has always been easy for Michigan residents to pop out of high school and pop into an auto assemby job starting at $25 an hour. The result is that Michigan, despite its great universities, has one of the lowest college-graduation rates in the country. Even though the state is out of money, it has to find a way to increase investment in education, making it more affordable (close to free!) and accessible. It's tough medicine but the cuts in education spending are only making the situation worse.
Michigan also needs to revive its heart. In my experience, despite Detroit's terrible reputation, it has many strong points and is one of those places that grows on you with its quirky charms. Still in order to succeed as a state, Michigan must revive Detroit and reverse its reputation. It must be a world-class city, a magnet for people of all income levels, ethnic backgrounds and skill sets. Today the state is missing a healthy, vibrant metropolis, a place where talented people seek to live and work, as well as open new companies and find talented workers.
Give incentives for entrepreneurship and nutty ideas
When I visit flourishing cities outside of Michigan, such as Madison, Seattle or Austin, I go numb from all of buildings plastered with company names containing the words "tech" or "soft". Here where I live in the Lansing area, near Michigan State, there are very few start-ups and little non-automotive business activities. What do you do when entrepreneurial energy, risk-taking and investment, some of the key ingredients needed to make start-ups happen, are missing? Ireland has gone from the ghetto of Europe to one of its richest economies, says Dynamic Business Magazine, mainly because of the country's education and training policies, combined with a determined effort to link universities and the private sector through industry clustering and technology transfer. Otherwise,the government and private sector can work more on business incubators and other testbeds for new ideas.
Ireland has gone to a net exporter of young people to a net importer. The same cannot be said for Michigan today, whose college grads tend to seek opportunities in Chicago, California and beyond. Might the promotion of open source, combined with other smart ideas, turn Michigan into Silicon Valley Midwest? After the auto-industry downturn, the state needs all the new ideas it can get. I wish the state all the best!