Perspectives

The View from Next Street

A sharing of ideas and policy perspectives.

 

On the evening of October 18, I had the pleasure to deliver the keynote address at the Bowdoin Geneva Main Streets Business Network on the subject of the future of cities and the role of its small businesses.

Ron Walker

printThe Future Is Already Here

By Ron Walker, President and Founding Partner

 

I am honored to be here with the Main Streets program. You do wonderful, indispensible work.

I know it isn’t easy doing this when you’re running a business. It’s more meetings to go to. More work to do. And it’s not always obvious how you’re going to gain by working on the other guy’s problem. But sooner or later, you will. And so will the community, and our city, and our nation.

Working on the other guy’s problem is the future for business. Businesses that only work on their own problems don’t innovate. New ideas come from networks like Main Streets. That’s where the future starts. And my job tonight is to tell you what I think it will look like when it gets here.

But first, I’d like to apologize to any vegetarians or vegans who are with us this evening. I’m going to make an observation that might be upsetting, about the difference between involvement and commitment. 

When someone orders bacon and eggs at Ashley’s Breakfast Shop a few doors down Bowdoin Street, the chicken that laid the eggs and the pig that provided the bacon each play a role. Certainly the chicken is involved. But the pig is committed.

The difference is one of my themes this evening.

There are a host of organizations that influence the vitality of our commercial areas. State and national government bodies make policy decisions that affect us. Big corporations make decisions about where to build and where to buy. America’s great philanthropic foundations have a big effect on the nonprofit side. And, as we’ve learned, what investors do on Wall Street can have an effect in Dorchester.

From time to time, all of these institutions are involved in what happens on Main Street.

But we are committed.

We live here. We are the day care center. We are the clinic. We are the class of 2011 looking for a job. We are the business where that job should be.

When you launched Bowdoin Geneva Main Streets 16 years ago, you understood something important about how cities – and people – work. Our commercial areas aren’t just places. They are ecosystems.

We are all connected. What I know as a businessman can help make the clinic or the community college more successful. Healthy people and better-prepared graduates can make my business more successful.

A connected community is not about joining hands and singing “Kumbaya.” It’s an active, mutual enterprise for shared growth. It’s a network – and every new connection makes it more effective and more valuable.

This is the kind of value we try to build at Next Street by connecting business people to nonprofit people to government people. We call it “connecting the dots.” Business owners are intensely focused on running their companies. We expand their field of vision and plug them in to a larger network. Our connections become their connections. 

And everyone we work with makes us smarter, too, and creates more possibility for future opportunity.

When Sandra Kennedy invited me to speak this evening, she asked me to talk about the next generation of business. This was lucky for me, because that’s something we think about a lot at Next Street. It’s why we have the word “next” in our name.

In many ways, the next generation of business is already here. It’s just not evenly distributed yet.

Connections – the kind you make through Main Streets, and the kind we make for our clients at Next Street – are the defining feature of the next generation of business.

No company succeeds alone. They have to buy from someone and sell to someone. But professional networks like Main Streets can extend our awareness and our reach even further – not just up and down the value chain, but across it. Public/private partnerships can help us realize opportunities that neither the public sector nor the private sector could take on by itself.

More and more of the deals we are part of at Next Street have six or seven different parties around the table – investors, businesses, nonprofits, the City. It’s not easy to get everybody involved. But if you can get them committed, you can do anything.

The future belongs to the organizations that think in terms of shared enterprise.

The next generation of business will be different in another way. It won’t surprise anybody in this room, but I guarantee you it will be a revolution in most corporate boardrooms.

Earlier this year, something important happened in America that almost nobody noticed. For the first time, more than half of all the babies born in the United States were non-white. And one quarter of America’s children now have at least one immigrant parent.

These new citizens will redefine consumer markets. In cities, they already have. Cities show us what the future will look like. In metropolitan areas, most of the people under age 18 are now non-white. And 22 of our 100 largest cities are “majority minority” overall.

Boston isn’t there, yet. Dorchester is. 

We are what America’s 21st century consumer market and 21st century workforce will look like. Look around. The future is about diversity on every dimension: race, ethnicity and culture, absolutely...but also a greater diversity of experience, education and age.

While recent immigrants are having their own baby boom, the original baby boom generation is moving back into the city from the suburbs, bringing their experience and their wealth back into our urban economy

Managing an increasingly diverse workforce is a new challenge for many of America’s largest companies. But for the business owners in this room, and our clients at Next Street, a local, multi-cultural, multi-lingual workforce is a competitive advantage.

Urban business owners know how to do things that the CEOs of big corporations haven’t had to think about yet. They also have a different relationship with their employees.

The CEOs of the urban companies that are growing the fastest – right now, in these tough times – have been investing proportionally more in training and benefits than Fortune 100 corporations.

What do you know that the CEOs on the cover of Fortune magazine don’t? 

For one thing, small business owners knew how to do more with less even before the recession. They had to. Access to capital has always been tight for small business owners. (How many of you started your business on a credit card?)

Now money’s even tighter and yet the most successful small company owners are investing more in their people. In return, they get more revenue per employee than big business does, and double-digit growth.

Today, big business is beginning to discover that they’ve been looking through the wrong end of the telescope. They’ve been looking all over the world for the lowest-cost labor rather than trying to develop the highest-value employees right here.

In the 21st century, the companies that prosper will be the ones that make their employees more valuable.

They will also be the companies that add the most real value to the communities where they do business.

For most of the 20th century, America’s largest corporations didn’t feel much need to be part of the urban ecosystem. There was always a new market they could expand into. Now, almost all the world’s markets have been developed, and companies from Over There are trying to expand Over Here. 

US corporations need to look to their roots. They know it. But they haven’t yet done it. Big business – money center banks, corporations, and I would include some philanthropies – is underinvested in America’s Main Streets, particularly our urban Main Streets.

Bank lending to small businesses like yours has declined every quarter since 2008.

America’s nonfinancial corporations are sitting on more cash than at any time in history: Over $2 trillion that could be invested in business expansion isn’t going anywhere. Our great foundations have most of another trillion dollars in their endowments. Some of that money could be invested in local businesses as well as nonprofit programs.

In 2005, I left a senior executive position at a bank because I believed that we need new kinds of institutions to unleash the power of small companies to innovate, expand, and hire. Since the financial mess, it’s even more obvious that we do.

At Next Street, our focus is providing small, urban companies with access to the capital and the expertise they need to grow, and become the engines of economic vitality they should be in their communities.

The expertise is as important as the financing, and sometimes more important. Getting an infusion of growth capital is like putting a bigger motor in a car. If you haven’t really thought about where you’re going, you just get to the wrong place faster.

We founded Next Street on the idea of giving business owners the same level of expertise that Wall Street, Madison Avenue and the elite consultancies like McKinsey and Deloitte provide to Fortune 500 companies. We help small companies identify new opportunities and sidestep risks. We help them strengthen their organizations. We even help them market their products.

I think you’re going to see more of this model in the future.

In the next generation of business, big companies will be more engaged with small businesses and with local communities. They’ll have to be.

For starters, the mass market is over. Most consumers live in cities, where there’s no “majority” market to sell to any more. Different kinds of people want different kinds of products. And, increasingly, they’ll only buy from companies they know to be engaged in their communities in meaningful ways.

And the new workforce is not just people from different backgrounds like us. The “millennial” generation of people in their 30s, just coming into management roles, is insisting that their companies be fully engaged with society.

They want to know the good that their employers do, not just how much money they’ll make. A company that is not actively committed to society, as well as profits, won’t get the best customers. It won’t get the best talent. It won’t last.

Like the meteor that caused mass extinctions in dinosaur times, today’s financial environment is putting existential pressure on organizations to adapt or die.

And as I mentioned, the future is already here. Many of the big corporations that are prospering in this economy are the ones that are investing in their people and in the small, urban companies that make the economy go.

IBM is leading a consortium of nine other far-sighted companies to build a single electronic platform that will enable small companies to bid for big contracts. Google is using some of its surplus cash to invest in small companies while taking advantage of tax credits. The business owners get financing. And Google makes more than money. The public thinks it’s a great company and Google is at the top of the list for top talent.

These companies get it. And I don’t think it’s a coincidence that they are high-tech companies whose business is understanding the power of networks.

Recently Barack Obama told the United Nations, “The way things have been is not the way they will be.”  He was talking about the world’s political economy. But he could have been talking about our economy – big business, small business, the whole shebang. The way things have been is not the way they will be.

In the next generation of business, know-how will be as important as capital. Know-how at the management level and expertise at the individual employee level. The most valuable employees will create the most value for business owners and investors.

In the next generation of business, the leadership of America’s biggest companies will look like the markets they serve. This is far from true today. But businesses with more diversity in the executive suite already out perform those where diversity is just a buzzword in the HR department.

In the next generation of business, “community” will be more than a place to “give back." Community will be the source of value and advantage for business.

This is because, in the next generation of business, Society’s needs will define new markets. Doing good won’t just be something companies do to look good. Helping communities be healthier, greener, smarter, and more efficient will be the best businesses to be in.

We know this is true because – in our cities, in Dorchester, and at Next Street – it is already happening. The only reason that more big institutions don’t see it yet is that it’s happening from the bottom up.

The future is already here. Look around. It’s in this room.

Thank you.

 
SHOW COMPLETE TEXT

The next generation of business will be different in another way. It won’t surprise anybody in this room, but I guarantee you it will be a revolution in most corporate boardrooms.

Earlier this year, something important happened in America that almost nobody noticed. For the first time, more than half of all the babies born in the United States were non-white. And one quarter of America’s children now have at least one immigrant parent.

These new citizens will redefine consumer markets. In cities, they already have. Cities show us what the future will look like. In metropolitan areas, most of the people under age 18 are now non-white. And 22 of our 100 largest cities are “majority minority” overall.

Boston isn’t there, yet. Dorchester is. 

We are what America’s 21st century consumer market and 21st century workforce will look like. Look around. The future is about diversity on every dimension: race, ethnicity and culture, absolutely...but also a greater diversity of experience, education and age.

While recent immigrants are having their own baby boom, the original baby boom generation is moving back into the city from the suburbs, bringing their experience and their wealth back into our urban economy

Managing an increasingly diverse workforce is a new challenge for many of America’s largest companies. But for the business owners in this room, and our clients at Next Street, a local, multi-cultural, multi-lingual workforce is a competitive advantage.

Urban business owners know how to do things that the CEOs of big corporations haven’t had to think about yet. They also have a different relationship with their employees.

The CEOs of the urban companies that are growing the fastest – right now, in these tough times – have been investing proportionally more in training and benefits than Fortune 100 corporations.

What do you know that the CEOs on the cover of Fortune magazine don’t? 

For one thing, small business owners knew how to do more with less even before the recession. They had to. Access to capital has always been tight for small business owners. (How many of you started your business on a credit card?)

Now money’s even tighter and yet the most successful small company owners are investing more in their people. In return, they get more revenue per employee than big business does, and double-digit growth.

Today, big business is beginning to discover that they’ve been looking through the wrong end of the telescope. They’ve been looking all over the world for the lowest-cost labor rather than trying to develop the highest-value employees right here.

In the 21st century, the companies that prosper will be the ones that make their employees more valuable.

They will also be the companies that add the most real value to the communities where they do business.

For most of the 20th century, America’s largest corporations didn’t feel much need to be part of the urban ecosystem. There was always a new market they could expand into. Now, almost all the world’s markets have been developed, and companies from Over There are trying to expand Over Here. 

US corporations need to look to their roots. They know it. But they haven’t yet done it. Big business – money center banks, corporations, and I would include some philanthropies – is underinvested in America’s Main Streets, particularly our urban Main Streets.

Bank lending to small businesses like yours has declined every quarter since 2008.

America’s nonfinancial corporations are sitting on more cash than at any time in history: Over $2 trillion that could be invested in business expansion isn’t going anywhere. Our great foundations have most of another trillion dollars in their endowments. Some of that money could be invested in local businesses as well as nonprofit programs.

In 2005, I left a senior executive position at a bank because I believed that we need new kinds of institutions to unleash the power of small companies to innovate, expand, and hire. Since the financial mess, it’s even more obvious that we do.

At Next Street, our focus is providing small, urban companies with access to the capital and the expertise they need to grow, and become the engines of economic vitality they should be in their communities.

The expertise is as important as the financing, and sometimes more important. Getting an infusion of growth capital is like putting a bigger motor in a car. If you haven’t really thought about where you’re going, you just get to the wrong place faster.

We founded Next Street on the idea of giving business owners the same level of expertise that Wall Street, Madison Avenue and the elite consultancies like McKinsey and Deloitte provide to Fortune 500 companies. We help small companies identify new opportunities and sidestep risks. We help them strengthen their organizations. We even help them market their products.

I think you’re going to see more of this model in the future.

In the next generation of business, big companies will be more engaged with small businesses and with local communities. They’ll have to be.

For starters, the mass market is over. Most consumers live in cities, where there’s no “majority” market to sell to any more. Different kinds of people want different kinds of products. And, increasingly, they’ll only buy from companies they know to be engaged in their communities in meaningful ways.

And the new workforce is not just people from different backgrounds like us. The “millennial” generation of people in their 30s, just coming into management roles, is insisting that their companies be fully engaged with society.

They want to know the good that their employers do, not just how much money they’ll make. A company that is not actively committed to society, as well as profits, won’t get the best customers. It won’t get the best talent. It won’t last.

Like the meteor that caused mass extinctions in dinosaur times, today’s financial environment is putting existential pressure on organizations to adapt or die.

And as I mentioned, the future is already here. Many of the big corporations that are prospering in this economy are the ones that are investing in their people and in the small, urban companies that make the economy go.

IBM is leading a consortium of nine other far-sighted companies to build a single electronic platform that will enable small companies to bid for big contracts. Google is using some of its surplus cash to invest in small companies while taking advantage of tax credits. The business owners get financing. And Google makes more than money. The public thinks it’s a great company and Google is at the top of the list for top talent.

These companies get it. And I don’t think it’s a coincidence that they are high-tech companies whose business is understanding the power of networks.

Recently Barack Obama told the United Nations, “The way things have been is not the way they will be.”  He was talking about the world’s political economy. But he could have been talking about our economy – big business, small business, the whole shebang. The way things have been is not the way they will be.

In the next generation of business, know-how will be as important as capital. Know-how at the management level and expertise at the individual employee level. The most valuable employees will create the most value for business owners and investors.

In the next generation of business, the leadership of America’s biggest companies will look like the markets they serve. This is far from true today. But businesses with more diversity in the executive suite already out perform those where diversity is just a buzzword in the HR department.

In the next generation of business, “community” will be more than a place to “give back." Community will be the source of value and advantage for business.

This is because, in the next generation of business, Society’s needs will define new markets. Doing good won’t just be something companies do to look good. Helping communities be healthier, greener, smarter, and more efficient will be the best businesses to be in.

We know this is true because – in our cities, in Dorchester, and at Next Street – it is already happening. The only reason that more big institutions don’t see it yet is that it’s happening from the bottom up.

The future is already here. Look around. It’s in this room.

Thank you.

Printed on Thursday, February 23, 2012
http://www.nextstreet.com/public_sector_initiatives/ideas_and_policy_perspective/the_future_is_already_here