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"Community Capitalism –
Lessons From Kalamazoo & Beyond"
Submitted by Henry Fischer, NREDA Past President
NREDA featured keynote speaker Ron Kitchens, CEO of Southwest Michigan First, a regional economic development organization serving the Greater Kalamazoo area of southwestern Wisconsin. He is also the general partner of the Southwest Michigan First Life Science Fund, which started much the same as the Science Initiative of Central Minnesota but has grown to become a $50 million regional venture capital fund that has attracted eight bioscience companies to the region. They operate the Michigan Medical Device Accelerator to help bring new medical devices to market; and the Southwest Michigan Innovation Center, to serve as a catalyst for entrepreneurs. The First Angels investment network also provides working capital and equity to help launch new businesses in the region.
RON KITCHENS ON
COMMUNITY CAPITALISM
Kitchens shared exerts from his book titled, Community Capitalism, Lessons from Kalamazoo & Beyond. He explained that Kalamazoo is in the center of a nine-county region of Southwest Michigan, bordered by Lake Michigan on the west, Indiana on the south, Grand Rapids to the north, Lansing to the northeast and Detroit and Grand Rapids to the east. In fact, Kalamazoo is located 150 miles east of Chicago and 140 miles west of Detroit.
The city has a population of 76,000 and the population of the region is over 300,000. It's a regional education center, based on Western Michigan University and Kalamazoo College, with over 26,000 students. Then there's the Kalamazoo Promise. Every resident graduate of the Kalamazoo Public Schools is provided with a scholarship for up to 100% of tuition and mandatory fee costs for four years at any public university or community college in Michigan, starting with the class of 2006. Books and room and board are not included. There is no residency requirement; they are not required to move back after graduation. Twenty-four cities around the U.S. have copied the program.
In the past, Kalamazoo was known for its production of windmills, mandolins, buggies, automobiles, cigars, stoves, paper and paper products. Agriculturally, it once was noted for celery and bedding plants. Gibson guitars were made here. The city is also home to the Stryker Corporation, a surgical and medical devices manufacturer and Upjohn, now part of Pfizer.
When philanthropy and business investment occur together, there's a multiplier effect, and if it is focused and organized, it is Community Capitalism. Kitchens and Southwest Michigan First people have studied most successful communities around the world and concluded that the ultimate goal for any community should be jobs and wealth creation.
Kitchens book details the region's long-term strategy for economic growth by focusing community resources into five key areas: place, capital, infrastructure, talent and education.
PLACE – More than any other time in history, people have the choice to live where their surroundings meet their cultural, civic and human needs. Communities that succeed will develop a sense of place for those who currently live here as well as those we wish to attract. We need places for smart people to hang out and thrive and incubate those ideas into the community.
CAPITAL – Companies cannot grow without money. People will move to get access to money. Communities that succeed will find ways to ensure that the flow of capital is maintained to meet the needs of individuals and companies.
INFRASTRUCTURE – The infrastructure of growth is no longer water or sewer. It's engineering schools, high-tech incubators and research institutions.
TALENT – Gone are the days when economies can focus on natural resources or low cost. The number one indicator of sustainable success is now the creation, development and deployment of talent.
EDUCATION – Great minds do great things. Communities that succeed will increasingly focus on education that is relevant, lifelong, and delivered in a manner that encourages the recipient to make the community their home for life. Seven cities and Detroit public schools are in danger of going into federal receivership and are facing bankruptcy. Meanwhile 1,800 new families have moved to Kalamazoo for college scholarships.
Southwest Michigan First takes a non-traditional approach to economic development. Their funding comes exclusively from the private sector. The public sector can help, too. An example he used was where do state pension funds invest? In venture capital and businesses in other states! Why not invest in your own state?
When they established the Life Science Fund, they raised $50 million in three days from high net worth individuals. He made it clear that economic development is not a charity or contribution – it's an investment in the regional economy.
FOOD FOR THOUGHT – Rural communities have to get over thinking that neighboring communities are competitors. Communities must develop the critical mass to think regionally to compete globally. They need to support entrepreneurship and innovation; and identify their strengths, unique assets and competitive advantages for their region? He encouraged attendees to not wait to start or expand their economic development program in response to hearing a company is closing. He also noted that economic development should not be thought of as a cause, government program, service or charity. In closing, he reminded the audience that a good measurement of success is how much wealth is being created in the community.
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