A Tolstoyvian Perspective on Revitalizing Michigan’s Economy—Or “It’s the Customer, Stupid”

5/10/10

To parody Tolstoy, all happy regional economies are alike; all unhappy regional economies are unhappy in their own way.

Michigan has more reasons than most for authentic unhappiness. Even putting aside its uniquely dysfunctional politics, the state’s struggling entrepreneurial class and its bankrupted automobile industry have humbled—humiliated?—what was once a global economic powerhouse.

Yes, the University of Michigan and other higher education facilities remain world class. Yes, the state has talented, high energy human capital. But Michigan—not unlike GM and Chrysler—is more of a turnaround challenge than a viable ongoing concern like, say, Ford.

So what’s the most important step entrepreneurs and innovators can take to invigorating the regional economy? That’s an easy question. The answer is found in the reason why all happy regional economies are alike. They have customers. They have good customers. They have customers who appreciate the region’s goods and services and will pay for them.

For far too long—for completely understandable reasons—America’s automobile industry was Michigan industry’s best customer. Period. Full stop. For reasons requiring no review here, ‘Detroit’ devolved from the ‘biggest & best’ customer to ‘the biggest’ to the most bankrupt. The details matter less than the cultural impact. Michigan’s economy grew up in a symbiotic/parasitic/pathological relationship with a global industry that did a demonstrably poor job of inspiring regional entrepreneurial and innovative subcultures.

Unlike Silicon Valley—or even Route 128 or Seattle—the Big Four and their Tier Ones didn’t foment or empower successive generations of innovators who could take their best ideas beyond powertrains, cars, and trucks. That’s sad. Michigan, its people, and its regional economy have paid an enormous price for that. So have America’s taxpayers.

Let’s be blunt: For almost a generation, Detroit was not a world-class … Next Page »

Michael Schrage is a research fellow with the MIT Sloan School of Management's Center for Digital Business and a visiting fellow at the 'Innovation and Entrepreneurship' program of Imperial College in London. Follow @

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