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Volume 6, No. 7
September 2010


Q&A with David Brandon

GM/U-M Joint Venture

U-M Medical Innovation

Suite Life

U-M Medical Center Hires 200

U-M Work Life/ Community Guide

North Quad Complex

October: High-Tech Businesses

November: Health Care

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local business
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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.

North Campus Research Center Rises At Former Pfizer Location

 Dr. David Canter, Executive Director, North Campus Research Center By David Baker and Margaret Baker

But each time a new Phoenix, the only one in the world, rises up from the red egg. The bird flutters round us, swift as light, beauteous in color, charming in song. – “The Phoenix Bird,” by Hans Christian Andersen

According to Egyptian mythology, a phoenix who reaches the end of its life settles into a nest of cinnamon sticks and ignites itself. And out of this tragedy of a bird and nest turned to ash by the blaze, a new, young phoenix arises in full color and splendor, with tears that heal and a song sweet to the ears.

When Pfizer closed its Global Research & Development site in Ann Arbor along with roughly 2,500 related jobs in 2007, the burning ash was felt throughout the region. Governor Jennifer Granholm called it "a punch in the gut," and Dr. David Canter, then head of Pfizer's Ann Arbor site, sympathized with those affected, noting, "There were a lot of tears as people began to realize, boy, this is real."

But the phoenix is now rising in full color and splendor. On December 18, 2008, the University of Michigan Board of Regents announced that the University would pay $108 million for the property, and on June 18, 2009 the sale was complete. Since then, the University has worked feverishly to make improvements to the space and prepare for the arrival of new occupants.

It is now called the North Campus Research Complex (NCRC) and the space is huge. Located south of Plymouth Road in northeast Ann Arbor and bordering U-M's North Campus, the space comprises 4 land parcels totaling 174 acres, with 420,000 square feet of office space and a capacity for over 3,000 people.

The most exciting news of late is the formal U-M Board of Regents approval of Dr. David Canter, long-time head of the Pfizer facility, as Executive Director of the North Campus Research Center. His experience with the facility, research, and the university are valuable assets in the success of the research complex.

Ann Arbor Area Impact
Dr. Canter recognizes how much the complex means to area businesses who were hit hard by its closing three years ago. "This campus can easily take 3,000 people and more," states Canter. "So, at some point, it's going to be full. I hope that the people who first feel it will be the businesses across the road. I'd like to hear them say, 'You know, this is beginning to feel like old times.'"

"But really the whole of Ann Arbor will feel it," Canter continues. "If we're hiring and we're bringing in new families, they're looking for houses, they're looking for schools, shopping at stores, and purchasing services. The university in general is a huge economic engine. The jobs that we have at the University here have significant multipliers, so other people are employed and, most importantly, we're feeling much better about ourselves."

This impact will not happen overnight, of course. Canter and his team are taking a thoughtful and methodical approach to moving new occupants to the facility. "Like many projects," Canter explains, "you seem to start slowly. In this particular case, everyone was looking at us, seeing this incredible empty space, and wondering 'What's taking them so long to fill this out?'

"We've already completed some of the relatively easier moves of office space research staff. Now we need to get the labs up and running. The lab space needs are much more complicated than office space needs. Labs require much more in support services. It's not just the lab, but also store rooms, analytical facilities, DNA sequencing, and many other support services. And even labs themselves are more complex. The rooms need to be provided with complex equipment, gases, vacuums, special chambers, etc. We know how to do provide the facilities; it just takes a lot of organizing."

On the Move
For many occupants, this organizing is completed and the actual move is underway. Canter describes the developments with enthusiasm. "Within the last year we have gone from five or ten people, just keeping the heat and lights on and keeping the place secure, to about 325 people at the moment. That's maybe a tenth of its capacity."

Some of these 'pioneer' tenants include:

"We would hope," Canter explains, "that by the end of September our occupant number will be up to just over 400, and by the end of the year up to 500. We're starting to open up and bring in different groups. Our last set of people moved at the end of August, and the next group begins moving in later this month. This group involves, among others, the Business Engagement Center (BEC) and the Office of Technology Transfer (OTT)."

Unlike Any Other Campus
Another reason the occupant growth level appears slow is the unusual organizational structure the facility will embrace. Canter is deliberate and methodical about how the occupants will interact with each other. "The idea is that we're not just moving pieces around the chessboard trying to fill the place up. The hardest part of our next few steps is around creating collaborative research projects that don't exist today—they are actually new ideas—that we hope will lead to real growth. We're taking a methodical and deliberate approach to creating new ideas here, and that just takes time."

"We're trying to avoid designating a building as being of a specific area of domain. People may well have their labs distributed through several buildings in order that people will connect. We are also looking closely at the environment that we create. We think about where people might bump into each other; where the proverbial water cooler might be. When we identify such 'water cooler' spaces, we consider the items we might place in that area, such as a white board on the wall so someone can stand there and scribble a problem out or just talk about things."

But beyond the structures and the space, Canter is clear that his primary concern is getting the right people. "My view," Canter emphasizes, "is that the most important thing is to get the right people, and not focus on the programs. The programs can be good as a starting point. But if you have what you think is a great theme in a program and the wrong people come out, you won't be successful. It's all about the right people coming. And from that, they will end up developing new ideas that turn out to be really good programs."

"One of the things I'm trying to get a sense for very quickly is 'Who are the people who really want to be here?' I really want to give them my attention. I want to focus on members of the faculty who are really interested in taking some risks, doing things differently, and creating something new. I want people who are not content with where they are today and are looking for something different. They're willing to come and be part of an organization that's being created as they participate, as opposed to moving into an institution that has been established for many years where their roles are already well defined."

"Anyone who has started up a small business would say, 'I understand this; you're putting things on the line.'" The faculty at the University is actually quite entrepreneurial. Many of them have had to create programs from nothing through grants and having their ideas tested. So, faculty generally do understand entrepreneurial. But in this case I'm asking people to do it in a much more collaborative setting; to think big and ask really important questions together."

A New Research Model
Canter voices this difference with emphasis because the research model at the NCRC is quite new and innovative. With an intentional break from existing research frameworks, Canter and the University faculty designed what the complex considers a "cutting-edge research model that proposes to revolutionize how research is organized and motivated."

This research approach is explained in the Research Scientific Programming Committee (RSP) Report. According to the report, one competitive advantage is that "The breadth of research at the University of Michigan is unparalleled. . .The presence of top tier research in engineering, medicine, public health, dentistry, chemistry, mathematics, pharmacy, natural sciences and psychology, among others, provides us a unique opportunity to bring together incredibly rich and diverse research teams."

The question, of course, is how to harness such an array of expertise. The NCRC's approach to this question is to establish clusters within a "decentralized community of researchers that self-organize along research themes," guided by seven key principles:

  1. Self-organized – Clusters formed on interests.
  2. Collaborative – Unique, collaborative space.
  3. Innovative – Flexible, responsive, nimble.
  4. Empowered – Researchers control decisions.
  5. No boundaries – Free to move among clusters.
  6. Co-location – Co-location of researchers/facilities.
  7. Efficient – Minimal administration and bureaucracy.

Canter explains how this all comes together at the NCRC. "One example of the projects that we're interested in at the NCRC involves biointerface, where biology meets engineering. The subject involves translating discoveries into practical solutions using microfluidics, nanotechnology, microfluidics and sensors, cell and tissue engineering, and biomaterials. There can be multiple uses in the development of devices, drugs, and diagnostics. This is a really interesting idea of bringing people together from the various fields of IT, engineering, medicine, pharmacology, physics, etc. The key question to answer collaboratively is this: How do you take something that works pretty well in the lab but has no application, and translate it into something that really impacts our society, a community, or an individual?"

What's Next
Canter has only been with NCRC one month but is moving quickly to shape the direction of the complex. He recognizes that while the NCRC is a new and promising area for the University, it remains just one element of the much broader scope of the University of Michigan that makes the University great.

"The University of Michigan is a very broad church. It has many people who are pure academics who wish to pursue the intellectual pathway to teach students. There are also many faculty who have a little entrepreneurial attitude and would like to see their work applied directly to societal problems. I think that the University of Michigan does well in providing for the two extremes. That's what makes a great university. A place that's comfortable for each end of the spectrum."

Canter obviously sees great opportunity in the NCRC both for the University and for the Ann Arbor area. "We're looking for good signs. Ann Arbor has always been a strong area of employment and growth, in large part due to the University, so it's important that we're doing well." Now that's a charming song we can all enjoy.

Q&A: Michigan Athletic Director David Brandon

By Chris Balas

Michigan Athletic Director David Brandon David Brandon arrived in Ann Arbor in the 1970s as a student-athlete prepared to pursue a path that would lead him into teaching and coaching. Today he's the most powerful man in the Michigan athletic department and – as such – holds one of the most respected athletic positions in the country.

There have been challenges since he left his position as Domino's CEO to succeed Bill Martin, including response to an NCAA inquiry into the football program; overall, however, it's already been a rewarding experience, and a marriage all in the athletic department say couldn't be better.

"I love my job. I love coming to work," Brandon said in an August 20 interview. "I'm working longer and harder than I can remember, which means I love my job. I'm into it, and I see the opportunities. I'm excited about fixing those things I think can be better, at the same time leveraging the strengths we have."

Brandon recently sat down with us for an extended question and answer session to discuss a range of subjects.

AA BIZ MO: You've been in this position since March, but you've already faced a number of challenges in your short tenure. Which have been the most daunting?

Brandon: "The biggest challenges have just been trying to move as quickly as I can to get to know the team I inherited, get familiar with the organizational structure of the place, at the same time do an assessment and find out who's here that can be a part of my team going forward, where I need to supplement and how I want to restructure the department to be more functional in terms of the way I think about the model of big time college athletics. I think there are things we can and should be doing that we just need to get structured. That's kept me busy, and it's an important part of any initial experience in a leadership role. I'm enjoying it, and it's certainly been a focal point.

"Then, just getting to know a lot of coaches. Some of them I knew before and many of I didn't. I'm getting familiar with and caught up to speed with a lot of the activities going on with the facilities, the opening of the stadium. All the work we're doing on Crisler Arena, both today and for tomorrow, plans we have in place for other facilities -- it's a busy time, but it's an exciting time.

"There have been no challenges that I didn't expect or anticipate. I would tell you that NCAA investigations are a lot more time consuming than I thought they were going to be. That's taken a lot of time and been a drain of time and focus, just because it's a very important topic and it requires a lot of attention."

AA BIZ MO: One area in which all conference athletic directors have been involved is Big Ten expansion. Some argue that the addition of teams and the implementation of a conference championship game is money driven and not necessarily best for the conference. Your thoughts?

Brandon: "Money is one of the filters that any change has to go through. It has to be financially viable and hopefully financially attractive, but there are other filters. I can tell you the presidents of the universities of this conference have a filter called academics that trumps everything, so if the academic fit isn't there, I can tell you nothing else matters. It isn't going to happen.

"Academics are an important filter, and geography to an extent. We have to have some sensibility. We don't play just one sport; we play 27, so if we're going to create conference match-ups, we have to think about how easy or hard it is to get back and forth to play and make that viable.

"And then the brand is a great filter. We want to have brands joining the conference that will add and supplement the prestige and the value of the overall conference. That isn't all about money. That's a lot about the fan base, the stadium, tradition and the kind of support they receive, how well they travel. There are a whole bunch of factors that really speak to the point of whether the brand is a national brand or a local brand.

"Nebraska, to me, is a perfect choice for all of the above reasons. It's a great academic school, expands the reach of the conference, has great tradition. Everything you look for we can check the box with Nebraska, and that's why I'm glad it happened."

AA BIZ MO: The Big Ten has long been about sharing the wealth between conference teams. Is there a way to tell specifically how much each school will benefit financially from Nebraska's addition?

Brandon: "I don't think anybody can, because we haven't negotiated, for instance, the television package around the championship game. We're still trying to figure out where these games are going to be played. We already know what year one is going to look like [Lucas Oil Field in Indianapolis], but that's a short-term decision.

"We have to bundle this up and determine where this is going to be played, negotiate the television contract around the championship game, and then as we create match-ups that will be new and different as a result of the divisional alignment, there may be all kinds of new opportunities. I think it's going to take some time before we can actually put a number to it, but I think we all agree there's upside."

AA BIZ MO: Downside for some is that Michigan and Ohio State might not play in the last regular season game of the year, bucking a decades-long tradition. Does the rivalry lose luster if it's not played in late November?

Brandon: "It doesn't have to be the last game of the year. It has been in our lifetime, but it hasn't always been the last game of the year.

"The reality is the conference has gone through a massive overhaul. The division concept creates a whole different approach to the scheduling of the season; who you're playing, when you should be playing certain opponents and how that would all set itself up for a championship game.

"I'm no different than anybody else. I'm trying to set up a scenario where there's tremendous balance between the divisions. We want there to be great competitive balance. We want to set up schedules that key up really important rivalries and create a lot of interdivisional competition, and then we want that championship game to be a 'wow,' where two great teams that survived the conference season and put themselves in position to go to that game tee it up against one another on national TV and really represent the conference in a great way.

"That's the approach we're going to take to this, and to get there, we may have to change some past practices. Geography will have very little to do with it. The driving principal – and [Big Ten Commissioner] Jim Delaney has articulated this -- is competitive balance. The worst thing that could happen is we split into an 'A' division and a 'B' division where there's a strong division and a weaker division. You've seen that happen in other conferences, and it's not good. What we're looking at is aligning the teams in such a way that we create that really strong, competitive balance. That's what we're doing."

AA BIZ MO: How much say will you and the other conference athletic directors have in the process?

Brandon: "We've had hours and hours and hours of conversation. One of the things I really enjoy about being a part of this conference is the collegiality. We're all in this together; we all have the same desires to promote the conference and to generate the most resources possible for our universities and to keep the brand of the Big Ten and our universities protected. We're all in it together, so it's been really fun to be a colleague of the group. We sit and look at all the factors, and it's rare that we're not on the same page, at least in my experience."

AA BIZ MO: Delaney has left the door open for further expansion within the next year. Do you expect more schools to join Nebraska and take the Big Ten beyond 12 universities?

Brandon: "I think there's a distinct possibility that there will be more change ahead. I think we're good for now -- obviously there's a lot of planning going around a 12-team conference -- but I would not rule out additional change at some point in the future."

AABIZ MO: Most schools now try to schedule as many non-conference games at home as possible for the revenue, yet there's been talk of going to a nine-game conference schedule that could limit those opportunities. Would you be in favor of a nine-game Big Ten slate, and why or why not?

Brandon: "I am in favor of a nine-game conference schedule simply because it's a great conference, and fans are paying more and more for tickets, suites and club seats. They want to see great match-ups. Nothing is better than Big Ten football games. I hear it repeatedly from fans; they want to see great match-ups and great football games. They want us to bring teams in where the games mean a lot, where there's a lot of spirit and a lot of competition.

"To that end, knowing how terrific and strong this conference is, my belief is the more games we can play amongst ourselves, the less we are trying to run around to find teams that fit that profile. We will continue to play eight games for a while, simply because any transition would take a period of time. Many programs have already made [scheduling] commitments. But I would hope we would at least strongly consider moving to nine games in the future."

AA BIZ MO: Is an NCAA Division I football playoff inevitable given its obvious financial potential?

Brandon: "I hope not. I don't think it's inevitable. There are certainly loud voices out there calling for it, but I think the people begging for that are distanced from many of the realities associated with that undertaking. This is not basketball. This is not a sport where you can play three games a week. This is a different world, but everybody wants to try to take that Final Four model and somehow turn it into a football playoff. That says easy and it does hard, and it's really problematic when you talk about extending the season for these student athletes, because we know when exams are and we know the amount of time these young people are already spending away from the classroom, the challenges associated with it.

"For somebody who just wants to see more football on TV for a longer period of time, for them to drive the bus in terms of forcing a playoff to me would be a very unfortunate thing."

AA BIZ MO: Safety concerns were always used as a reason against scheduling night games at Michigan Stadium. You said you didn't approach the city with the idea before scheduling Notre Dame for an evening kickoff in 2011 – have they since voiced any concerns?

Brandon: "No. I did talk to our chief of the public safety department. We have our own police force that's responsible for the campus, and I spoke with him in advance of the decision and got his viewpoint. Frankly, the reaction I got was we already play at night. There are many, many games in the latter part of the season where by the time the crowd leaves the stadium and filters out to the parking lot, it's dark. We already know how to handle the crowds, string lights and light up the stadium. It's not like those things haven't happened, it's just that they've mostly happened in the second half as opposed to the entire game.

"We've handled it before, and we'll learn to handle it for this. When we made the announcement, I indicated the first night game Michigan played was 1944. I can't remember the number, but I think we've played 33 night games since then. There have been plenty of schools … Iowa has figured this out, Michigan State, Penn State, Ohio State. I've got to believe that if all of those schools are able to do it, we're smart enough here in Ann Arbor to figure out how to do it."

Ann Arbor Business Monthly: Any initial opposition to the Michigan Stadium, $226 million renovation and expansion project seemed to wane considerably as the project advanced. What's the reaction been to the final product?

Brandon: "Change is hard for people, and for some people, their reaction to change is to be negative and find fault. And that's okay. That's part of change.

"When we first contemplated changing the look of Michigan Stadium and incorporating some new amenities and spaces, there were people that were very uncomfortable with it. Once they've seen how it was done and the quality, the architectural appeal of the facility, they understand the financial consequences of what we did in terms of bolstering revenue streams that will be for the betterment of virtually every sport this department supports.

"People will see we have a more beautiful Big House, and that we've been able to retain all the things we love about the Big House but at the same time will generate new revenues, create a louder Big House and a more competitive Big House. When you take recruits through that tunnel and they stand on the 50-yard line, they're not seeing this old, antiquated press box that looks like it's going to fall into Main Street. They're seeing the premiere football venue in college athletics in the United States of America. That's a nice place to recruit from. It's a great place to play, a great place to coach and it's a project I think everybody's going to embrace."

AA BIZ MO: The economy isn't what it was when the project was first proposed several years ago. How have you had to change your marketing strategy, if at all, to sell remaining suits and club seats given the current climate?

Brandon: "The anticipation when we first put this together … the economy was roaring and we would have hoped we'd have had everything sold before the first game. But we weren't that dumb that we weren't going to be at least at some risk, because cycles happen and things occur, so we ran the models very conservatively. We ran the models based on the fact that we wouldn't sell everything; we ran the models as though we would not get any development or gifting toward the project, and we ran the models at a much higher interest rate than we ultimately felt we were going to experience.

"Where we sit today is we got significant donations and contributions and gifts to the project, all of which came off the bottom line of the debt. We got a much lower interest rate in terms of the debt, which helps the cash flow and the model perform better. We brought it in on time and on budget, and we have crossed that point with our suite and our club seat sales to the point where this is a positive contributor generating positive cash. It's a financial success.

"Now every suite we sell and every incremental club seat we sell as we move toward the finalization of our inventory just becomes more additive in terms of what it means. I think it's a real testimony to the brand -- the support we get from our fans, our loyal donors and supporters -- that even though times are tough in terms of the economy generally, the business of the University of Michigan is strong and the loyalty factor is strong. We're doing just fine."

AA BIZ MO: There's obviously no model on how wins and losses will affect that … but how important is it for the football program to get back to its winning ways?

Brandon: "Well, sure. People want to see a winner, right? Winning is what Michigan is all about. We compete for championships. That's why you come here as a player or a coach, as an A.D. The expectations are high, and we intend to win and compete for championships. That's what we're going to do.

"We've been playing Michigan football for 131 years, and if you go back, they haven't all been championship years; they haven't all been great years. You're going to go through cycles; you're going to go against the downs. Frankly, if you didn't every once in a while, you might not remember how hard it is to be on top and stay on top.

"What the last couple years have proven to our fans is just because we show up wearing those winged helmets doesn't mean that anybody's going to lay down for us. You've got to go out and you've got to defend your championships, your position as an elite school, every game, against every school. Obviously the last couple of years have been tough, but we'll learn from it, get better and move on."

AA BIZ MO: How much are night games and rumored match-ups with Alabama at a neutral site, for example, a way of staying strong in a difficult economic climate?

Brandon: "Those things wouldn't be related to ticket sales, per se. Our ticket sales are good -- very good. We're not worrying about ticket sales for football. Some of our other sports we're getting more aggressive with marketing and trying to do some things to stimulate more interest and sell more seats, but it's certainly not an issue for football.

"Rumors about us playing Alabama or night games, some of the things we're doing … first off, I'm kind of a change is good guy. I believe in some cases our fans have been waiting for some of these opportunities that haven't been here before. They appreciate it and they get excited about it.

"The other thing is I want this to be a program that plays on the big stage. This is a big stage program, and if you want to be a big stage program, you play the best. You put yourself on national television; you get out there where people are watching you play against big, tough opponents to prove you'll play anywhere, anytime to be on the big stage to show off your program.

"Within the realm of reasonableness, doing that from time to time is a positive thing. I believe when we are recruiting student athletes, the fact that they feel they can come and play in the first night game in Michigan Stadium is a positive. I know our current players love the idea that they're finally going to be able to play a night game at home as opposed to on the road. To the extent that we line up any of these kinds of national premier programs to play against, those are calls to action for our coaches and our players to say 'hey, we're Michigan. We're going to go take on the best in the business.'"

AA BIZ MO: Operating in the black versus ensuring Michigan's facilities are second to none – what's more important to David Brandon?

Brandon: "The answer is 'yes.' (laughs). What I get paid to do is both. I don't get paid to make compromises. My job is to make sure we continue to be financially strong, generating revenues we need to support the projects that are important and then deploying that capital in a way that's making sure we're doing the right thing by our student athletes and coaches.

"I'll continue to do that. I think we've done a good job of that over the last several years, and I plan on continuing that."

AA BIZ MO: What's next on the agenda in terms of facility upgrades and improvements?

Brandon: "The [basketball] player development center is obviously under construction, and we'll relatively soon have our plans in place for the next phase of construction that will start to become the things our fans will see in Crisler Arena. Our players and coaches will love the player development center, but it won't really change the fan experience other than we'll be able to recruit better players as a result of becoming more competitive. But what we want to do is get into the arena, put in new seating, make a lot of changes that will be welcome by all of our fans who want to support Michigan basketball.

"That's the next priority on my list in terms of capital investment and facility upgrading. We're working on it actively. We have a sketchy timetable, but until we go before the regents and get approval, we're not going to talk timetables because ultimately they get to decide how and when this thing gets financed -- how and when it starts and ultimately when it will finish. We won't get ahead of them."

AA BIZ MO: There's also been talk of replacing the Michigan Stadium scoreboards and potential further expansion. Has there been any movement there?

Brandon: "Certainly expanding the stadium will have a lot to do with fan support and interest and waiting list for tickets, making sure if we do add more seating we do have more people wanting it then seats available. That's always been the case with Michigan Stadium. We'll be watching very carefully to find out what our theoretical capacity could be, and if we believe it could be larger than it is today then we'll be able to pull that ripcord and do something about that.

"Somewhat related to that -- because we're talking about the north and south ends of the stadium now -- would be what we're going to do with the technology and the scoreboards. Those are eight or nine years old with technology that's even older than that. To a certain extent, it's like buying a beautiful new suit and putting a cheap tie on it. We've got a beautiful new stadium and those scoreboards are certainly dated and somewhat undersized for the scope and scale of the new stadium.

"I believe there are opportunities there. We've spent some time working on that and costing out some scenarios, and we've got some smart people looking at alternative. That will be a project we continue to study. I don't want to picture a day where people are sitting in the stands and want to see those great replays and the kinds of things these high definition video boards can provide, and we're looking at a scoreboard that, depending on where the sun is, maybe we can see what's up there or maybe not. Its one of the investments you have to make that the fans both appreciate and expect, and at some point in time we're going to do something about that."

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