Volume 3, No. 7
September 2007

IMPACT Articles Include The Following: U of M Economists Forecast

Big 3 Gain From Higher Fuel Economy Standards
Q & A with the Director of U-M Cardiovascular Center

U of M Contributions to the Community

U of M Outreach Programs

Be Sure To Read BIZ MO's Regular Feature Writers:

Mike Gould Small Business & The Internet A Trip with Local High School Students To The HoloDeck

Mel Muskovitz on Employment Issues

Ann Arbor Area BUSINESS MONTHLY magazine brings the reader the latest business news and information important to the businesspeople in Washtenaw County. Each month articles cover real estate, legal, Internet, employee concerns and the climate of business in the greater Ann Arbor area. There is news about company employees and feature articles on local businesses. We cover business news from Ann Arbor, Chelsea, Dexter, Manchester, Milan, Saline, Whitmore Lake, and Ypsilanti.

Knowledge Economy Is The Future
For Michigan

IMPACT - the University of Michigan issue
After his graduation from the U-M Carl Collins settled at  Enlighten.
After his graduation from the U-M Carl Collins decided to stay in Ann Arbor and settled at local firm Enlighten.

By Stephanie Kadel-Taras

If you want to see the knowledge economy in action in Ann Arbor, come to Eastern Accents on Fourth Avenue any Thursday at noon. At a recent gathering of the A2B3 crowd (the "B3" refers to the restaurant's bi bim bop), the row of pushed-together tables ran the entire length of the restaurant. Thirty-one people-about one-quarter women-came to network, catch up, and make announcements to the group. They represented local technology and Internet companies from startups to established firms, with a few freelance contractors (programmers, tech writers) added to the mix. Started by U-M alum and Internet pioneer Ed Vielmetti as a way to see his friends each week, A2B3 has become an informal nexus for local knowledge workers and entrepreneurs.

Many of these are graduates of the University of Michigan who have chosen to stay in this area and make the most of the burgeoning knowledge economy here. Carl Collins began attending the lunches while he was still a student in the U-M School of Information, and he used his contacts to find a job after he graduated last December. "I had job offers in Texas and Silicon Valley," says Collins. "These were entry-level jobs, and the salary was about the same everywhere." But the standard of living was not. "Ann Arbor was more livable." He started out doing freelance work, some for people he met through A2B3, and he now works at Enlighten, a local provider of Internet-based business solutions.

Collins is the kind of young person that state and local leaders want to keep in Michigan to help the state transition from a manufacturing to a knowledge economy. Of course, the Ann Arbor area was essentially founded on a knowledge economy, and one could easily argue that we have a head start in retaining knowledge workers. But nobody who is working toward these goals is taking that for granted. Community and university efforts to grow-and staff-the knowledge economy continue to expand, along with the challenges to success.

The Makings of a Knowledge Economy
A study released this summer by the U-M Center for Local, State, and Urban Policy (CLOSUP) argues that Michigan is making steps toward establishing a knowledge economy while navigating the tough terrain of a historic economic transformation. The study's author, Thomas Ivacko, writes that a knowledge economy "requires a motivated and educated workforce suffused with a spirit of entrepreneurialism, a sense of personal responsibility for one's own economic future, a penchant for risk-taking, a love of life-long learning, and an openness to other cultures."

That definition seems apt for this area. In April, Ann Arbor topped Expansion Management's list of the ten best "knowledge worker" metropolitan areas. These are communities with a highly educated workforce including plenty of scientists, engineers, and doctors, as well as a variety of colleges and universities including a major university with aggressive research and development programs. In July, Fast Company cited 30 cities around the globe for having the opportunity, energy, and innovation that attracts people to live and work there. Ann Arbor wasn't in the top 30, but it made the magazine's runner-up list of 20 "Cities on the Verge," and was noted as a "startup hub" (along with Beijing, China, and Bozeman, Montana).

Ivacko's description of the knowledge economy also fits many U-M graduates who are making a living in the local technology and life sciences fields. Consider, for example, Jen Baird, CEO of Accuri Cytometers, who earned a BA in psychology from U-M in 1990. She spent a decade in Chicago, but when she wanted to return to Michigan to make a career change and be closer to family, she chose Ann Arbor as the "place with the most innovative economy." She also chose the U-M Tech Transfer office as the vehicle for her new career.

After partnering with Collin Rich, who earned his Ph.D. in electrical engineering at U-M, Baird approached Tech Transfer about emerging engineering technologies with commercial possibilities. Three years later, with state funding through the 21st Century Jobs Fund, $5 million in venture capital, and fourteen employees (several are U-M grads), Accuri is about to launch its product-a high performance, easy to use, more affordable flow cytometer for laboratory cell analysis.

"We couldn't have done it without U-M," says Baird, or without this community. "The knowledge in the Ann Arbor area has been tremendously helpful. We found capital, a great team, great technology-all the makings of a great beginning."

U-M's Role in Fostering a Local Knowledge Economy
The U-M Tech Transfer office is an obvious means by which the university helps create and support local knowledge-based companies, but it's not the only activity on campus working to strengthen the local and state knowledge economy. For example, the University Research Corridor, an alliance between U-M, MSU, and Wayne State University, was formed to help create a vibrant Michigan economy and attract knowledge economy businesses. The URC website describes practical applications of research findings and highlights the economic and workforce impacts of the three public research universities.

A URC-commissioned study by Anderson Economic Group in East Lansing finds that almost 618,000 Michigan residents are U-M, MSU, or Wayne State alums, and these alums earned an estimated 7% ($24.3 billion) of all the personal income earned in Michigan last year. Over 45,000 of those alums live in Washtenaw County (the fifth highest after Wayne, Oakland, Macomb and Ingham). These kinds of data argue not only for the value of higher education to the state, but when combined with quality of life data, they help position southeast Michigan as an attractive place for business relocation and capital investment.

The URC is also helping organize a two-day conference at U-M in mid-October on the role of engaged universities in economic transformation. The conference is an outgrowth of a recent report from the National Academies of Sciences, Engineering, and Medicine called, "Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future." The goal of the conference, according to the U-M website, is "to initiate the creation of a plan and implementation strategies that manufacturing states can adopt to assist their transformation into more prosperous and sustainable economies." Speakers will include government officials, CEOs of major companies, and top university leaders.

Another U-M initiative that could enhance the local knowledge economy is a new effort by the College of Engineering to promote a greater entrepreneurial spirit among students. The resulting "Mpowered" program will highlight entrepreneurial job opportunities in small, high-tech Michigan businesses and will provide mini-grants to engineering students with venture ideas they'd like to pursue.

U-M is also doing what it does best: researching and publishing on the issue. Thomas Ivacko's summer 2007 paper for CLOSUP on "Michigan's Economic Transition: Toward a Knowledge Economy" examines statewide employment figures in the various sectors (education, health services, financial services, etc.) to argue that the state is already on its way toward establishing a knowledge economy. He wants to highlight the positive trends and success stories in order to foster a culture of optimism and hope.

Ivacko says, "We cannot ignore real problems going on in the state. They are real, and we have to deal with them. But if all we focus on are the negatives, we are actively preventing progress. There is enormous activity going on in the state, too."

Producing and Retaining Knowledge Workers Perhaps the most important way in which the university fosters the local knowledge economy is by graduating knowledge workers who are willing to stay in the area. Creating well-educated workers is something U-M does well. But getting them to stay in the area is a different challenge. A spring 2007 Detroit Free Press poll of 640 students at the University of Michigan, Michigan State and Wayne State University found that 53 percent said they plan to depart the state when they graduate. Retaining these graduates requires a community effort focused on job creation, competitive salaries, quality of life, and those harder-to-influence factors like family ties.

Dunrie Greiling is a good case in point. She came to U-M for a master's and Ph.D. in ecology and evolutionary biology and graduated in 2000. She has stayed in Ann Arbor since, working as a project manager for BioMedware, Menlo Innovations, Sagient, and now Pure Visibility (an Internet marketing firm). None of her jobs has had much to do with her degree in ecology except as it relates to interactive systems.

So what accounts for her career? First, it's about networking. A friend from grad school introduced her to her first employer, and her contacts have kept her in the tech field ever since. "Each job has brought me closer to my dream job," says Greiling. Her latest job came through networking at A2B3 lunches. Second, it's about quality of life. "I've never not walked to work," she says proudly. She bought a house on the Old West Side, works downtown, and doesn't own a car. She also loves living close to a family getaway in Ontario. Third, it's about family. She met her husband when they were both in grad school at U-M, and he got a job in the area, too.

"We do well with people who already have ties to the region," says Amy Cell, director in charge of talent enhancement at Ann Arbor SPARK. "Any of the people who come here for school are fair game to get them to stay here."

Cell is capitalizing on this opportunity through various efforts to connect university students and graduates with local jobs in the knowledge economy. Job postings on the Ann Arbor SPARK website target life sciences, IT, software engineering, and early start-ups. In the year she has been at SPARK, Cell has seen a "fairly steady to growing" list of job opportunities, but she admits that efforts to promote SPARK as a place to post and find jobs may account for increased postings. Still, she is pleased to see knowledge economy openings at all levels, from CEO searches to marketing, finance, and consulting positions. "There are a lot of opportunities out there right now," she claims.

Cell is herself a U-M alum (a 1993 MBA grad), and she came to SPARK from a position in the U-M Business School. Her ties with the Zell Lurie Institute for Entrepreneurial Studies has hastened SPARK's career services efforts. Cell has modeled SPARK's "Mingle & Match" program on a similar program at the Institute. At this event, entrepreneurs pitch their businesses and needs for talent to people looking for work opportunities. Structured networking follows. Cell calls it "speed dating for startups." Cell will also be working with the U-M career placement office, upcoming career fairs, and internship programs to ensure that local companies are represented and that students are aware of the opportunities to intern and work in the community.

Some Challenges
The benefits to local companies of recruiting local graduates are many, according to Cell, including no relocation costs, ability to maintain a certain company culture, ability to maintain ties to U-M, and access to the latest research-based solutions as learned by recent graduates of a major research university.

The challenges are considerable, however. "Smaller, growing companies are looking for specific skills at a specific time," says Cell, while graduates enter the job market twice a year. It's also harder for small companies to afford the time, training, and mentoring necessary to bring a recent graduate up to speed. "College recruiting programs are most successful with large employers who can dedicate resources to training new graduates."

While internships can help connect students and bring them up to speed, new economy companies are moving fast and may not have the luxury to structure an internship opportunity around the university class semester. A local leader in Internet-based marketing had to laugh at a plan for a class project that he and his colleagues might spend half a day working on.

The salaries possible at small, new economy companies can also be a problem. Tim Neiman, co-founder of local IT consulting company Dynamic Edge, earned an MBA through U-M's evening program while growing his business. Many of Neiman's fellow graduates went on to huge pay raises in big companies (in other cities). "My pay stayed the same," he laughs, "but I get to do a lot of things here that most people don't get to do"-like deciding what direction to take the company.

When Neiman helped found Dynamic Edge, it was just going to be a way to earn a living until the bigger job came along. Now it's a nine-year-old company that has grown every year. Such an entrepreneurial approach to entering the local knowledge economy is another way to deal with the challenges. "Being an entrepreneur is not just about starting a new business," says Ivacko, "but about developing a new attitude of being personally responsible for your own economic opportunities."

Thomas Meloche knows about that. A 1986 U-M graduate in computer engineering, he has made this community fit his career by creating the companies he wanted to work in. Meloche was one of the four founders of Menlo Innovations. His latest venture, StudyTag.com, is using the possibilities of Web 2.0 and social sites to help individuals learn and remember facts more easily. He says Ann Arbor can't compare to tech company hubs like those on the west coast, because it simply doesn't have the amount of capital or numbers of people working in these fields. But the smaller network is also a benefit: "It is really possible to know most of the people involved in the technology business here," says Meloche. "It's a close community."