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


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customer for innovative companies. Michigan’s inhospitable business climate discouraged innovators who could afford to choose between Ann Arbor and Palo Alto.

The challenge for entrepreneurial graduates of the Ross School or Wayne State or Kettering University is the same challenge confronting entrepreneurial graduates of MIT, IIT (Illinois or India) and Instituto de Empresa: who are the customers and clients we want? Why? Because it takes more than money to be a great customer.

Unlike many economists and policy wonks, I think higher education and ‘knowledge intensive’ skills are grossly overrated as innovation ingredients. I can say without hesitation that I’ve seen arrogant PhDs fail more spectacularly than humble college graduates who know they’re not the smartest person in the room.

After googling & binging stories about Michigan’s economy and the state’s attempts to foster entrepreneurial growth, I was appalled. The editorial emphasis on ‘supply side’ skills and the minimalist discussion of who the customers for innovation will be is distressing. Michigan’s entrepreneurs need smart customers even more than they need smart employees. There’s a reason why Henry Ford, Alfred Sloan, Charles Kettering, and Walter Chrysler were so successfully innovative—and it wasn’t because they hired the smartest people in Michigan.

Maybe a post-bailout/post-bankruptcy clutch of auto ‘giants’ will have the wit, wherewithal, and willingness to transform themselves as customers and not just as companies. Who knows? I don’t. But if Michigan’s political class and aspiring entrepreneurs stress their smarts and ‘quality of life’ over reasonable, rational, and compelling discussion of the customers who will make their industries great again, then I wouldn’t bet on a turnaround.

The world is filled with smart people who work hard. So is Michigan. But what separates happy economic growth from wrenching economic recession aren’t the IQs and the energy. It’s the environment where people are encouraged to create and serve new markets and new customers. Does Michigan have that yet? We’ll see.

[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.]

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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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