Four Things Michigan Can Do to Reinvigorate its Economy (And One Thing to Avoid)

5/12/10

The interesting thing about Michigan is that as a state it has already implemented many forward-thinking economic development strategies and policies. Michigan has been much more innovative than Washington state has been in this respect. Washington’s success has frankly been in spite of, rather than because of, state policy much of the time.

We in Washington state are getting better, but the technology sectors and the jobs they provide have been a bit taken for granted by our citizens and state government. Not so in Michigan. For example, I was going to recommend that Michigan encourage more angel investing by providing income tax deductions for angels who invest in Michigan startups. Guess what? Already done. Michigan has several other programs promoting access to capital which they should continue, as venture capital will continue to be in short supply for the foreseeable future.

Michigan should make sure it has strong programs in entrepreneurship at all the state’s colleges and universities. This is already being done through the Great Lakes Entrepreneur’s Quest, but more programs like this should be encouraged. Host lots of business plan competitions. Invite successful entrepreneurs to campus to talk to students. Help students learn the difference between a small business that stays small and one that becomes a high growth success. Encourage ambition and thinking big. UW hosts an “Environmental Challenge,” an annual competition for the best green idea. Hundreds of students participate from across the state. Dozens of us attend to judge it and other competitions to encourage the next crop of entrepreneurs. Grow a new generation of smart, idealistic and energetic entrepreneurs and support them along the way and the business culture will change.

One thing that really impressed me when I visited Austin, Texas several years ago was how they celebrated their entrepreneurs. In their uniquely-Texas-charming way, they just bragged about how many cool software companies they had and how great the CEOs were. The community—mayor, chamber, venture capitalists—supported entrepreneurs in any way they could and they made a big deal out of an industry which was actually quite small at the time. Through marketing their region externally and nurturing the companies they did have, they grew what was a small set of companies into a sector. I would copy them.

Here is a don’t: Don’t chase after out-of-state businesses with big tax breaks. It’s so last century and it is a big waste of time and taxpayer money. Really focus on growing your own.

Lastly, and most importantly, really support your higher education system, especially your research universities. This is an area where Michigan is truly world class. Take very good care of University of Michigan and Michigan State University, even when it is difficult to because of budget constraints. They are creating knowledge and the next generation of top-flight scientists, engineers, and entrepreneurs. Some will leave the state, but many will stay—especially as more local companies have great jobs for them. You grow an innovation economy first, last and always with smart, creative and talented people.

[Editor's note: To help launch Xconomy Detroit, we've queried our network of Xconomists and other innovation leaders around the country for their list of the most important things that entrepreneurs and innovators in Michigan can do to reinvigorate their regional economy.]

Susannah Malarkey is the Executive Director of the Technology Alliance, a statewide organization of leaders from technology businesses and research institutions dedicated to Washington's long-term economic success Follow @

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