If you Google “leading urban innovation economies” and then look for Detroit, you have to look down the list before you find it.
Places like Silicon Valley, Boston-Cambridge, Austin and Seattle in the United States, and Bangalore and Shanghai overseas, are much more prominent.
Richard Florida, founder of Creative Class Group, finds that ironic, considering that, for much of the 20th century, metro Detroit was home to the world’s most technologically advanced manufacturing industries and the world’s largest complex of corporate R&D laboratories.
“And, for all of its struggles over the last half century, the region still has phenomenal strengths that it can leverage,” Florida wrote in an op-ed.
Florida authored a recent report, “Competing at Scale: The Case for A Detroit-Ann Arbor Innovation Corridor” supported by the Detroit Regional Chamber and the University of Michigan.
A visiting distinguished professor at Vanderbilt University and visiting senior fellow at the Kresge Foundation, Florida was one of the keynote speakers at last month’s Detroit Policy Conference, hosted by the Detroit Regional Chamber at MotorCity Casino.
The conference focused heavily on the “innovation economy,” and Florida argued that Detroit has always been at the center of that idea.
“Detroit sat at the very center of the old world of innovation,” he told the crowd. “It was a world in which big corporations drove the innovation economy back in the late 1940s after the war. A study of Detroit and the Big Three, conducted in 1948, concluded that the core of Detroit was not an industrial powerhouse, was not just a manufacturing economy, was not just this constellation of great companies and suppliers, all of which are absolutely true. It argued that Detroit and the Big Three had pioneered a new kind of corporation, a new kind of economy and a new kind of worker.”
Florida recognizes the last half-century hasn’t been without struggle for the area but says the big takeaway of his recent study is that the region still has “phenomenal strengths that it can leverage.”
“That’s the big takeaway … on the potential of creating a world-class Innovation Corridor that can better leverage the incredible high-tech capabilities of Detroit and Ann Arbor, supported by the Detroit Regional Chamber, the University of Michigan, and others,” Florida said.
Several panel discussions at the policy conference centered around the theme of innovation. Sandy Baruah, the chamber’s president and CEO, pointed out Detroit’s potential for driving the innovation economy isn’t solely dependent on the Big Three automakers.
But they are, obviously, a key cog.
“When we think about the innovation economy, it’s certainly not just about the auto industry,” Baruah said. “I mean, think of the assets that we’ve already heard about. FinTech, healthcare innovation driven by AI is going to change all of our lives.
“But when we think about our auto industry, we are still the Motor City,” he added. “The auto industry that we invented and defined the world is the most complex and valuable supply chain on the planet. Every country that has two coconuts to rub together wants a piece of the automotive supply chain, and keeping it here in Michigan is not a guarantee, but it is a necessity.”
He also said what he called “legacy industries” are the “basis of the next best thing.” The aerospace industries of the West Coast, Baruah said, spawned the big tech companies of today, and the auto industry “can lead that basis.”
“When I think back to … how this state approached the last big transition in the automotive industry, I think there are lessons to be learned,” Baruah said. “In the 1970s and the 1980s, a lot of folks in Michigan had the thought that we’re not going to give up our big American cars for these little boxes. (But) We have to think about what is coming next, not where we are today.”
That was a large part of the focus at the policy conference, which gathered together experts in innovation for a discussion on how to drive the innovation economy in Detroit and how to make sure Michigan is a player in the global innovation space.
Panel discussions also revolved around the need for regional transit and how to keep startup founders in-state.
As far as Florida is concerned, a model of cooperation between Detroit and Ann Arbor is a vital component for high-tech-driven economic development in the region.
He said his study showed something he called “amazing:” There are very few places in the United States – in the world – that match the asset base in the Detroit-Ann Arbor innovation corridor.
With more than $20 billion a year in corporate research and development, he pointed out, the area is among the top five centers of corporate research and development in the United States.
“Only New York and San Francisco and a few other places do more, and a place like New York is five times larger in terms of population,” he said.
One of the top three centers for academic research in the United States, a group named Startup Janome, pointed out Detroit-Ann Arbor lagged behind (areas like) the San Francisco Bay Area or Boston or New York or Los Angeles, London and Shanghai. But in their study done a couple of years ago, they flagged Detroit Ann Arbor as the world’s best emerging startup ecosystem, Florida said.
Baruah mentioned the downtown, the Detroit-Ann Arbor corridor, the university research corridor, which includes the University of Michigan, Michigan State and Wayne State University, produces more students every year than the Bay Area, Boston, Cambridge, Los Angeles or any place in the United States, according to Florida, with 100,000 undergraduates and 50,000 graduates.
“When you look at this corridor in terms of the kind of people who do innovative work, I call them the creative class, people who work in knowledge-based industries, research and development, entrepreneurship,” he said. “They can be college graduates. They don’t have to be college graduates. They work in management in STEM fields, in knowledge-based deals, in arts, entertainment. A million of those folks a year.
“One thing that … bears repeating: Detroit-Ann Arbor sometimes get a bad rap for not retaining talent,” he added. “That’s only partly true if you take all the two- and four-year universities in this region.”
Florida pointed out that a man named Jonathan Rothwell, who was at the Brookings Institution and now works at the Gallup organization, took LinkedIn data he said shows where young people go to university and then where they move.
The Detroit metropolitan area, including Ann Arbor, has one of the highest overall rates of talent retention in the country. Roughly 75% to 80% of the young people who go to school here stay in the region, he said.
He calls it a “critical point” that people coming out in critical fields like artificial intelligence, computer science software, chemical engineering related to the new energy and battery technologies, people in those critical fields, young people in those super important fields, those are the ones most likely to leave, but not because they don’t like it – “This place offers incredible affordable quality of life … The excitement of downtown and its comeback, great college towns, great suburbs live.”
Instead, they tend to leave, he said, because the opportunities to work on the most exciting projects or to make more money are elsewhere.
“This is what the corridor can help us staunch,” Florida told the conference crowd. “And I want to point out something that I think is critically important, and I don’t think this has been obvious to people outside of the Bay Area, outside of Boston, outside of a few places, not obvious in a lot of other regions, especially in this great heartland of the United States.
“It is a great city and metropolitan area combined with a great college town,” he added. “And this is why the corridor is so darn important.”
As is keeping talent – especially young talent – in the state. Among the experts at the conference pressing the need to keep tech talent here was Dug Song, the co-founder of Duo Security.
“UM is being strip-mined for relocatable talent by big tech, by investors, by Silicon Valley startups,” Song said. “And as a business school professor once told me — I hate this (but) I’m going to tell you anyway — sometimes in Michigan we train the best, but we keep the rest.”
In his keynote address, Song drew on his own success building a startup in Ann Arbor and talked about what he said was a “secret ingredient” in the process.
“Community,” he said. “It’s not just how we set a table, but how we invite folks to it.”
Song pointed to tech innovation and growth happening across the state, pointing out, for instance, the Grand Rapids-based startup webAI which is now worth $3.5 billion. And Handshake, an app developed by a Houghton company in the Upper Peninsula to connect students to internships and jobs, employers, career coaches and other resources today is worth $700 million. But many “baby companies” have proven hard to hold onto, he said.
Despite all the innovation success, Song pointed out, the state is still losing some of its unicorns, much more than expected.
The University of Michigan has just three of 46 unicorn, $1 billion-plus companies launched by UM alumni in Michigan; despite its top ranking in research and its 800 founders who’ve raised $27 billion in investment, Song said.
Song built Duo Security with 1,000 other people, then sold it for some $2.5 billion in 2018. His goal, he said, was to help others get a chance to take a chance like he did.
Of course, representatives of the local universities agree their institutions are a huge part of any innovation corridor established, especially between Detroit and Ann Arbor.
Wayne State University president Dr. Kimberly Andrews Espy called her school Detroit’s “hometown university” and said the school’s tech town, founded 25 years ago, provides an opportunity to “really take those ingredients that are strong and can do so much and organize them together to have a common strategy bringing together our big business, our founders, our funders, to really then work a strategy to work a recipe.”
“Michigan is a special place because of the strength of the research universities, each of whom contribute something distinctive and that together is greater than the sum of its parts,” she said.
University of Michigan President Dr. Santa Ono was asked about U-M expanding its reach with a new, $250 million center of innovation currently under construction that puts the school, as Florida pointed out during a panel discussion, “at both ends of the Ann Arbor and Detroit Innovation Corridor.”
Ono, who became U-M’s president in October 2022, pointed out the three local universities have “relatively new presidents” – Espy took over at Wayne State in August 2023 and Dr. Kevin Guskiewicz was hired at Michigan State in March 2024 – who have “come together” to see “what we can do for Detroit, what we can do for the state of Michigan.”
“We’re really excited. There are going to be some … I think, significant announcements coming out of this group in the not-too-distant future,” Ono said, though being cagey about what those announcements might be. “We’re really working together … coming together this year to talk about what we can do in the space of water, in terms of clean water and both technologies surrounding water.
“We think Detroit’s the happening place,” he added. “It’s an amazing renaissance, an amazing ecosystem of founders’ businesses. And like I said before, at different venues, the stars are aligning. We’re coming together in a way that we need to so that the 46 unicorns that come out of the University of Michigan stay here in the state of Michigan.”
The belief is that, for such a corridor to be successful, something aside from talent is needed to connect it.
Kofi Bonner, the CEO of Bedrock, used the conference panel discussion to push the idea of either regional transit or a rail connection between Detroit and Ann Arbor.
Such a system could help attract younger workers or convince them to stay.
“It can be hard to attract talent, particularly in the Gen Z workforce,” Bonner said. “These people don’t really want to drive. They’re not interested in the lifestyle that we’ve all become accustomed to in Southeast Michigan.
“I think if we can take it to the next level and make rail transit a reality, that would really help us to attract workforce and future corporate development opportunities,” he added.
Florida pointed out in an op-ed that Detroit-Ann Arbor is uniquely positioned to start a new “business model” for innovation. Until recently, he said, the Silicon Valley’s model had focused on the “creation of entirely new industries, like e-commerce, social media, smart phones, the Cloud, and AI.
“For all its successes, this model has its downsides, conferring disproportionate benefits to wealthy entrepreneurs and venture capitalists, and techies, while fanning the flames of economic inequality and making housing unaffordable for just about everybody else,” Florida wrote.
By combining its university R&D with its industrial capabilities, a Detroit-Ann Arbor Innovation Corridor can “create a new and better model for innovation.”
“By remaining true to its heritage and values, this new Innovation Corridor can chart a far more inclusive approach which generates a broader base of family-supporting jobs while lifting up much larger segments of the community,” Florida said.
At the recent State of the Region economic report unveiling, Baruah reiterated the fact the region has “always been a leader in innovation.” That’s why, he said, the U.S. Patent and Trademark Office opened its first office outside Washington D.C. in Detroit.
“It’s because of the amount of innovation, the amount of patents that this region files,” Baruah said. “But for all of our great innovation and patent powerhouse, all of our innovation for the most part has been within the great companies that reside in this area, about 13 fortune 500 companies just in this broader region alone.”
Now, with assets like the reopening of Michigan Central Station, the construction of U-M’s new Innovation Center, Wayne State’s Tech Town and the advancements in health care from Karmanos and Henry Ford Health, the region becomes an even more important player in the innovation economy space.
“These are all new, plus our existing innovation, open innovation assets really have the potential to accelerate this region’s regional innovation economy and give us a whole new gear as we accelerate into the 21st century,” Baruah said. “Nothing says how much we are an education powerhouse more than having four R-1 universities.
“We really need to focus on … Ann Arbor to Detroit and then eventually Ann Arbor to Detroit, to Windsor to Toronto, a broader innovation network,” he added. “This is what they do in the Bay Area. This is what’s happening and has happened in Austin. We can do the same thing, but we can do it nationally. All of these things are hugely important as we move forward.”
