Creative Class

There’s a great post by Edward Glaeser (in the Economix blog of the New York Times), titled “New York, New York: America’s Resilient City.”

In it, he describes how New York has managed to avoid the decay that has afflicted many large older cities, and, after a brief downturn in the 1970’s, came roaring back as arguably the most influential single city in the world.

His explanation? In a word - “smart people.”

“New York still has an amazing concentration of talent. That talent is more effective because all those smart people are connected because of the city’s extreme population density levels. Historically, human capital — the education and skills of a work force — predicts which cities are able to reinvent themselves and which ones are not. Those people who are continuing to pay high prices for Manhattan real estate are implicitly betting that New York’s human capital will continue to come up with new ways of reinventing the city. “

Glaeser continues, describing why dense cities succeed…

“They thrive by enabling us to connect with each other, which then promotes learning and innovation. The current downturn will only increase the returns to being smart, and you get smart by hanging around smart people. As long as New York continues to attract and connect those people, the city will continue to thrive.”

Now here’s what every city planner wants to know. Is this replicable? Can this success be engineered or encouraged, and are the effects measurable in 10 years, 20 years, a lifetime?

Does anyone have successful examples of campaigns and projects to replicate this resilient infrastructure? Or perhaps, examples of some cautionary unsuccessful attempts?

Best wishes to everyone for a creative and fruitful New Year!

My Globe and Mail column is out.

SOCIAL SCIENCE: THE POST-SUPERPOWER WORLD

Russia’s youth ready to embrace the dawn of a new era

Hard to believe, as we enter a thoroughly globalized world in 2009, that as an elementary-school student, I crouched under my desk every time an air-raid siren pierced the unsteady calm. I was born in 1957, the year of Sputnik, and my first political memory is of John F. Kennedy announcing that he would “stand up” to Russia during the Cuban missile crisis. Back then, in the United States, we grew up believing that we were engaged in a titanic struggle against a mortal enemy whose very existence threatened our creed of individualism, freedom and liberty.

But when I visited Russia this month, I was struck at how similar it has become to the United States. Certainly, the country is pushing to develop more of a market-based economy, having abandoned its state-run economy to the historical dustbin. But it’s more than that.

In Russia, as in the U.S., everything is big. People are loud and aggressive. Many are overweight. The roads are clogged with gas-guzzling SUVs. Billboards advertising luxury products dot the sky, and women walk around covered in designer labels - most of which, as in the U.S., are knock-offs. In a Moscow airport café, two young women are transfixed by the Russian version of InStyle magazine, poring over pictures of Sarah Jessica Parker, Paris Hilton and Scarlett Johansson.

And, just like the U.S. then and now, Russia is security-crazed - from the contortions required to obtain visas to airport checkpoints, from the suspicion of anyone taking a photo in a restaurant or hotel to the metal detectors at the entrances of official buildings, even the security gate at my hotel’s front door. Police sirens blare into the night, reminding me of city life in the U.S.

But it’s among the youth that the similarities between Russia and the U.S. become eye-popping.

While older Russians still appear to smoke and drink too much - evoking a U.S. culture more typical of the 1950s Mad Men era than the present - young Russians, with their jeans, T-shirts, BlackBerrys and iPhones, are virtually indistinguishable from their Western counterparts.

I had been invited to Moscow along with Megatrends visionary John Naisbett, Garage Technology Ventures start-up guru Guy Kawasaki and billionaire entrepreneur Richard Branson to take part in a conference on innovation and entrepreneurship, meant to encourage a new generation of techies to launch start-up companies in Russia.

Even as someone who has written about the growth of a new global creative class worldwide, I was struck by how much entrepreneurial zeal there was among Russia’s young generation.

I asked our interpreter and guide - a twentysomething foreign affairs staffer - what could account for it. Three things, he said.

One is globalization. Young Russians are well aware that they are part of a global economy, a global lifestyle and growing global class.

The second cause is communication. With international distribution of television and movies (including the Russian version of the recent Hollyood comedy Baby Mama), the boom in Internet and social media, the country’s young people are participating in cutting-edge trends.

The third is language. Young Russians (of whom he is a perfect example, he said) are speaking more and better English. When I addressed a class in Siberia last year, many of the students (a self-selected group for sure) engaged me in perfect English, asking questions that mixed academic insights with of-the-moment slang. I couldn’t help but feel that these young Russians had developed capacities that even exceeded so many of their North American peers. They seemed perfectly poised to navigate our global economic terrain.

As I sat in the fashionable Pushkin Café near the Kremlin and Red Square one evening, musing that the bustling nightlife around me could just as easily been that of Toronto, New York or London, it occurred me: I was witnessing the dawn of a new era. The age of the great superpower conflict - of a generation and a world defined by the Cold War - is over. While both countries remain powerful in their own ways, they are now subsumed in a global economy that is bigger than either of them.

At the conference, John Naisbett spoke of the rise of Asia, and especially of China as not just the world’s factory but as a growing centre of research and innovation. He described new universities, new research institutions (including one that he runs), high-speed trains and the striking, architecturally significant new airport terminals being built there. The contrast between an emergent society in the throes of rapid expansion and older societies that are living off the past and failing in many ways to embrace the 21st century could not have been clearer.

While Fareed Zakaria, editor of Newsweek International, describes a post-American world defined by the rise of the rest, I now think of our era as that of a post-superpower world. The energy has shifted, and been unleashed, and it’s not just a wide range of countries that matter, but mega-regions such as the Beijing-Shanghai corridor, the Mumbai-Bangalore axis, greater Toronto and its environs, Cascadia in the Pacific Northwest, and all throughout Asia, Europe and across the world - everywhere the Internet and global airwaves now reach.

Language, communication and openness to new ideas - these are now the drivers, whether you find yourself in New York or Toronto, Amsterdam or Moscow.

It will be interesting to see how the first post-superpower generation in the U.S. and Russia handles the looming economic crisis. Judging from the ubiquitous Louis Vuitton purses and InStyle readers in the Moscow airport, populations in both countries appear to be in denial about the prospect of a full-fledged depression. Americans still pacing the malls fervently wish that some combination of government bailouts, Federal Reserve action and the incoming Obama administration will save them. Russians cannot bear to think back to the late 1990s, when they last faced an economic fallout, and have stockpiled savings and foreign reserves in the hopes of avoiding it, even in the event of a stock-market collapse.

But it’s also clear that we share more connective tissue. A truly global creative class has emerged and is growing. We are all much more connected and similar than ever before - much more so than when we cowered under our desks at the threat of mutually assured destruction when I was in grade school.

Call me an optimist, but that fact bodes well for our shared future.

As a graduate of the U of Michigan, I can only try to forget what an awful football season we have just endured. However, a recent WSJ article reminded me that the Big 10 football conference and all major conferences are being outperformed by the teams of the Southeastern Conference (SEC).

The WSJ asks “What the rise of Southern Football Says About America,” in an interesting piece by Darren Everson. And while there is no overt mention of Detroit’s Auto Industry and the South’s Auto Industry in the article, the ongoing bailout saga kept popping into my head as I read the article. A snippet:

In recent years, the South has undergone rapid growth. Twenty-seven of the 50 fastest-growing metropolitan regions in the country in 2007 were in the South, while personal-income growth in the region outpaced the national average over the past decade. These changes have added muscle to the South’s historic passion for college football. While they rank low in many measures like per-capita income and educational achievement, states like Alabama and Mississippi rank close to the top in the percentage of high-school students who play football. And among states that have more than 10 native sons playing in the National Football League, the top six producers by percentage of population are Louisiana, Mississippi, South Carolina, Alabama, Florida and Georgia.

I began to wonder, is there some connection between the success of SEC football teams and the rise of the Southern Auto Industry?

Are Big 10 teams stuck with ‘Fordist’ football models while SEC coaches and administrators make use of ‘continuous improvement’ and other concepts in order to strengthen their programs? Are SEC leaders better at innovating with recruiting, play calling, and conditioning? (Remember, Gatorade was created at the U of Florida.)

The article points out a few potential theories for why the SEC has grown into such a football powerhouse, including pride of place that Southerners exhibit in their states, tight relations between SEC schools and Southern politicians, and academic standards in the SEC that differ from other conferences such as the Big 10 and PAC 10.

While there is likely no connection between successful SEC football and the successful Southern auto industry, it highlights the spiky nature of the creative economy - from auto production and college football administration to content creation and biotech. I believe that is what the rise of Southern football tells us about America.

BTW, I will remind all SEC fans that Michigan (and its old school coach Lloyd Carr) did beat Florida (and new school coach Urban Meyers) handily during last January’s Capital One Bowl Game.

Rapidly improving and expanding network computer technology is a key reason why workplaces today are shifting fast toward more mobile and flexible environments. Reflecting upon events of the past week, I think there is another massive revolution in workplaces still to come.

The Obama campaign demonstrated the potential of computer-facilitated personal networks to bring about change. Through Facebook and MySpace, along with websites like YouTube, supporters connected with independents and people who were potential supporters, creating a viral-like marketing campaign. People found numerous different ways to connect and spread a message. Obama rode this 21st-century communications revolution to victory - it was not a machine to build and control, but rather energy and ideas to harness.

As corporations relax their rules about “who can be doing what on their work machine when,” a new generation might just use the myriad communications options available to do something fantastic. When corporations “let go” they might find they can hitch themselves to something amazing.

Imagine a global corporation - maybe a software company or an accounting-consulting firm - in which people at all levels and positions could interconnect and network together, and then solve problems together. A company with an internal intranet containing an internal Facebook, blogs, work logs, etc. fully searchable by anyone else in the company. Perhaps employees anywhere in the world could connect in any way they needed to: video conference instantly from their laptops, or leave video messages for each other.

If all the talent in the company could connect easily, that could bring enormous innovation acceleration. Problem solving could be far more efficient. Maybe David in the office in Singapore has already solved a problem now facing new person Carly in the office in Boston? What if Carly could type in a few key words and learn that David dealt with the same issues last month?

While I’ve heard of companies trying to better connect their workforces through intranet applications, I haven’t heard of too many turning all or most of the process over to all employees, especially the younger generation (but please comment and tell me who is doing this if you know).

The first company that achieves this extreme interconnectivity would instantly have tremendous leverage against competitors from an enormous boost in productivity and innovation.

Obama was the first major politician to grasp the potential, and harness the power, of youth and technology - and just look at how far ahead it put him. He left the best late-20th century political machine in the dust (the Clinton camp) and made McCain look like a relic of the 1950s.

So-Flo, which stretches from Miami to Orlando, west to Tampa, and along two northern offshoots to Gainesville and up the Atlantic coast to Jacksonville, is the seventh-largest mega-region in North America and the 15th-largest in the world, home to 15 million people and $430 billion in economic activity each year. Click here for more.

In the wake of financial turmoil, the globalization of research goes on. IBM is set to open a major new research center in China, while Microsoft plans three new research centers in Britain, France, and Germany. The global serach for talent continues. My hunch is that the combination of financial and economic instability plus immigration restrictions will make the U.S. a slightly less attractive or viable location for global talent. Even though the effect is likely to be modest, companies will continue to redeploy where the talent is or wants to be.

Less than two weeks ago, I attended the Inc. 500 Conference at National Harbor in D.C. and heard Newman’s Own co-founder A.E. Hotchner deliver a speech full of wit, stories, and great insights about business and the idea of a human sector.

Less than a week ago, Hotchner’s partner and the company’s namesake, Paul Newman, died at the age of 83. Newman & Hotchner’s experiences with their Newman’s Own venture is worth looking at as this venture is likely to be his greatest legacy.

Newman’s Own’s legacy has been built through the great charity and direct help that it has produced (nearly $250 million donated so far), but more importantly for being an early, prominent success case of passionate, creative social entrepreneurs in action - putting a great product based on value into the marketplace in order to promote positive social change.

When Newman and Hotchner launched Newman’s Own in 1982, I don’t believe social entrepreneurship was in widespread use and was not being taught on college campuses. Today, the field is growing fast for two reasons: 1) demand for meaningful work and impact by creative class and younger works, and 2) the huge market of need that still exists among all of our economic plenty and government largesse.

Below are some excerpts from a long obituary by Lynn Smith at the LA Times. The entire piece is worth reading; Newman, an average kid from the Cleveland suburbs grew into a fascinating man whose path through life is worth remembering and sharing. It truly highlights the power of creativity applied across many sectors and a lifetime. Enjoy - and go buy some Newman’s Own sauce or dressing or cookies in Newman’s honor! From the LA Times:

Since the 1980s, Newman had devoted more time to Newman’s Own, a food products company he founded as a lark that grew into one of the nation’s largest charitable organizations. The company, which produces all-natural salad dressings, popcorn, sauces and lemonade, has turned over more than $250 million in after-tax profits to hundreds of groups, including his own Hole in the Wall Gang camps (named after the outlaw gang in “Butch Cassidy”).

His real-life role as a philanthropist began just before Christmas 1980 when he and his friend A.E. Hotchner made a batch of salad dressing in a bathtub to bottle for friends.

Newman was as much a perfectionist about his cooking as his art, friends said. “He knew the exact amount of fat that goes into the perfect hamburger,” Stern said. “In his salads, he sliced the celery the exact width.”

In restaurants, Newman was known to ask for olive oil, vinegar, chopped celery, salt, pepper and mustard to make his own dressing. On one occasion, when waiters at Chasen’s in Beverly Hills wouldn’t comply, he took the salad into the men’s room and washed the dressing off. “They brought the stuff he wanted, and he made the dressing,” Stern said.

Newman told reporters he never imagined the dressing would be sold nationally, but after the Christmas leftovers were given to gourmet shops, the lark became a challenge.

When it became clear the dressing could make a profit, especially with his face on the label, Newman decided to give back some of what luck and the world had given him.

Newman and Hotchner wrote witty labels to go with the company’s motto: “Shameless exploitation in pursuit of the common good,” which later became the name of their book that describes their adventures in business.

The company grew to produce many products, including popcorn, salsas, pasta sauces, marinades and Woodward’s “Old Fashioned Roadside Virgin Lemonade.”

In 2006, he opened Dressing Room: A Homegrown Restaurant to benefit the Westport Country Playhouse, one of Newman and Woodward’s favorite projects.

As a result of his business success, Newman donated more than $250 million to 1,000 groups, including the Scott Newman Center — devoted to anti-drug education — and several Hole in the Wall Gang camps, designed for children with life-threatening diseases, with locations in France, Ireland and Israel as well as the U.S. Every summer, Newman stayed at the original camp in Ashford, Conn., where he told ghost stories and staged shows with other celebrities for children who knew him only as the face on the lemonade carton.

“If I leave a legacy,” he said in 2006, “it will be the camps.”

This year, he turned up at a meeting of parents and children at the first camp and reportedly said: “I wanted to acknowledge luck. The beneficence of it in many lives and the brutality of it in the lives of others, especially children, who might not have a lifetime to make up for it.”

Whether you ultimately agree or disagree with his conclusions, this essay by John Gray of the London School of Economics in today’s Globe and Mail is a succinct statement of the deep issues confronting the American political economy.

The fate of empires is very often sealed by the interaction of war and debt. That was true of the British empire, whose finances deteriorated from the First World War onward, and of the Soviet Union … Despite its insistent exceptionalism, the United States is no different. The Iraq war and the credit bubble have fatally undermined U.S. economic primacy. The United States will continue to be the world’s largest economy for a while longer, but it will be the new rising powers that, once the crisis is over, buy up what remains intact in the wreckage of the U.S. financial system …

The irony of the post-Cold War period is that the fall of communism was followed by the rise of another utopian ideology. In the United States and Britain, and to a lesser extent other Western countries, a type of market fundamentalism became the guiding philosophy. The collapse of U.S. power that is under way is the predictable upshot. Like the Soviet collapse, it will have large geopolitical repercussions. An enfeebled economy cannot support the United States’ overextended military commitments for much longer. Retrenchment is inevitable and it is unlikely to be gradual or well planned.

Meltdowns on the scale we are seeing are not slow-motion events. They are swift and chaotic, with rapidly spreading side effects … A U.S. retreat from Iraq will leave Iran the regional victor. How will Saudi Arabia respond? Will military action to forestall Iran acquiring nuclear weapons be less or more likely? China’s rulers have so far been silent during the unfolding crisis. Will U.S. weakness embolden them to assert China’s power, or will China continue its cautious policy of “peaceful rise”? At present, none of these questions can be answered with any confidence. What is evident is that power is leaking from the United States at an accelerating rate. Georgia showed Russia redrawing the geopolitical map, with the United States an impotent spectator.

Outside the United States, most people have long accepted that the development of new economies that goes with globalization will undermine the country’s central position in the world. They imagined that this would be a change in the United States’ comparative standing, taking place incrementally over several decades or generations. Today, that looks an increasingly unrealistic assumption.

Having created the conditions that produced history’s biggest bubble, U.S. political leaders appear unable to grasp the magnitude of the dangers the country now faces. Mired in their rancorous culture wars and squabbling among themselves, they seem oblivious to the fact that U.S. global leadership is fast ebbing away. A new world is coming into being almost unnoticed, where the United States is only one of several great powers, facing an uncertain future it can no longer shape.

The ultimate outcome of this ongoing financial crisis will be a new and different geography of capitalism - within nations and across them.

How does stuff like this make it into the newspaper …

Writing in the Toronto Sun, Sue-Ann Levy weighs in on Toronto’s new economic development initiatives, claiming that:

“But after some questioning, it became pretty clear that Build Toronto has creative guru Richard Florida’s finger prints all over it, not those of the blue-ribbon panel members.”

I guess I should be flattered by my influential “fingerprints,” but I’ve not had a single conversation with anyone inside or outside of city hall about these new initiatives. So it’s a real puzzle to me how they could have gotten there.

And Levy shows a disturbing disregard for factual evidence when she writes that:

“… Toronto is not a world-class city. Even Tel Aviv has us beat by a long shot. I was absolutely amazed at how cosmopolitan that city has become during my recent trip to Israel. Istanbul, Turkey, as I discovered, is also open around the clock.”

Say what? There are many, many empirical rankings of world cities. In writing the Canadian edition of Who’s Your City? my research team and I looked over a whole slew of them to gauge how Toronto and other Canadian cities measure up. Tel Aviv certainly has great cosmopolitan energy, and Istanbul may stay open 24 by 7, but Toronto is way ahead of either as a center for business and talent - ranking roughly among the world’s 10 to 12 most important global cities.

I am not an economist. I do not know the techniques, standards, and theories of behavioral economics. That said, I know that actions speak louder than words.

There has been a lot written about the ‘collapse’ of the U.S. financial system due to the current credit crisis - with pundits, economists, politicians, and others pointing fingers and claiming their ideologies and policy explain why the U.S. is ‘bankrupt’ and doomed. There has been a lot of ink and electricity spent pushing these theories.

Regardless of all the talk and prose, Warren Buffet, the greatest capitalist of all time, put down $5 billion today on the U.S. financial system when he invested in Goldman Sachs. He also has the right to put down another $5 billion over the next five years at today’s prices.

Yes, his deal is a sweetheart deal, but investors like Buffet build wealth and strengthen the economy in times like these. GS, the best brand in the financial world, is paying a big price for Buffet’s brand and knowledge, but it sends a clear signal: the smartest institutions and people are moving forward as hot air blows from Capitol Hill, newsrooms, blogs, and press conferences.

Yes, these times are difficult and there is pain to be doled out, but panics and bailouts are part and parcel of the great engine of economic and social change known as capitalism and have been a regular occurrence in the U.S. since Hamilton’s time. There will be regulatory and institutional tweaks in the coming months and years, but that is how the system functions.

The warrant portion of the Buffet-GS deal shows that the Oracle of Omaha views five years as long-term. How long do you think it will take for this mess to sort itself out? Or are you part of the ‘end of the world’ chorus?