Revitalization through Innovation Lasell College Entrepreneurs Travel to Detroit

- 14 mins

opportunity_detroit

REVITALIZATION THROUGH INNOVATION: Students from Lasell College (Newton MA) travel to Detroit, and learn from entrepreneurs rebuilding motor city

Harris Demos, Isaiah King, Alexa Katsigianis(BUSS337 Managing the Growing Company)

As our small group of Lasell College students took our first few steps through the Detroit Metro Airport, our opinions immediately began to shift our perceived image of the “broken city” of Michigan. Our vision based on previous hearsay. However, Lasell College is aware that students are more successful when they can connect their learning experiences from the classroom into the real world. The connected learning philosophy and application has opened our minds to exploring opportunity of the unknown, which Detroit proved to be the best “unknown” any of us could have pictured.

opportunity_detroit

The streets showed us vivacious colors and innovative ideas that many other United States cities do not. Detroit’s vision is to transform Downtown into an urban neighborhood with a unique point of view, which is exactly what is being done.

Through these alterations, Detroit will continue to attract a young demographic: one that is willing to jump at the first site of opportunity. These simple yet brilliant creations proved to us, and will prove to the incoming urban population, that government officials have the desire to implement change. This refreshing outlook with open-mindedness has not always been persistent in the past. However, higher interest and connections from Detroit residents are beginning to transform and re-populate the downtown. This will continue to bring fresh business ideas into the thriving city of Detroit.

The Problem

Detroit is one of America’s greatest cities and is known for its historical development and success within the early stages of the automotive industry. Ford Motor Company was founded in 1903 by an entrepreneur named Henry Ford. Even though Ford did not create the first automobile, he did develop and manufacture the first automobile that many middle class Americans could afford. The Dodge brothers, Walter Chrysler, and other automotive pioneers paved a road that allowed Detroit to become the global automotive capital. In the year 1950, there were almost 300,000 manufacturing jobs but that number dwindled down to less than 27,000 in 2013.

In 1960 Detroit had the highest income per person in each household but in 2013, the city ranked 35^th^ out of 50 states. From 1960 to 2013, the city slowly lost over fifty percent of its population and filed for Section 9 bankruptcy. Detroit went from the fourth biggest city in the United States down to the 18^th^. It is apparent that Detroit was once a place flourishing with opportunity that allowed its residents to clearly vision and achieve the “American Dream”1. Currently opportunities do exist, possibly even more than before, but these opportunities were manifested from the rundown ecosystem Detroit has rebirthed into.

To this day, Detroit is the largest city to ever go bankrupt. This economic tragedy was precisely four times larger than Jefferson County, Alabama’s $4 billion filing in 2011. The reason for Detroit’s bankruptcy mostly involves the word “fiscal”, which refers to economics from the perspective of the system to which they belong – with the central factors including taxes and spending. More specific reasoning for the cause comes from the widespread corruption within Detroit municipalities which resulted in a billion-dollar “borrowing binge”. Detroit was caught up in borrowing unreasonable amounts of money for cash-flow reasons but failed to replace the cost of these investments. The culture of the fiscal economy in Detroit made a shift in the late 20^th^ century. This involved spending future money for purchases that were needed presently. The city was able to function temporarily but filed for bankruptcy in 2013 with an accumulated amount of $20 billion.

Detroit has its obstacles to overcome the economic downfall. The city developed a reputation of lacking fiscal responsibility. One of the most obvious outcomes of the bankruptcy was unemployment. The economic structure of the city was built upon large automobile companies. When downtown went bankrupt, people were dislocated from their jobs and homes due to the large business owners’ outsourcing human capital. The residents flocked the city due to the economic downturn beginning in 1947.

Between 1947 and 1978 there were 1.36 million jobs lost within the automotive industry in the United States due to the importation of Japanese manufacturing. The city population dropped forty percent from 1970 to 2006, and as of 2013 the total population was less than 700,000 people. These large corporations did not utilize the opportunities for hiring within the community or even the country, which could have prevented the bankruptcy all together. Instead, Detroit residents had poorer economic standings due to the over-production of cars2.

People were not in the financial position to make major investments such as buying a new car every few years, and as a result the demand for cars was significantly lower than their supply. Once the big businesses in a given area went bankrupt, such as General Motors and other large automobile companies in Detroit, they were no longer able to pay taxes and therefore provide for public services. The lack of input and output of money into the economy at the time of bankruptcy negatively impacted other local businesses, such as schools and public transportation.

This caused a large amount of blight throughout the city. As of 2013, nearly one in four buildings in Detroit are abandoned or on the verge of becoming owned by the state in order to be demolished3. This lack of occupancy makes it difficult for Detroit to attract young professionals into the city. Buildings being destroyed and rebuilt will take time. Therefore it is imperative that Detroit turns these buildings into something that can be used instantly.

Considering the economic strain on our national fiscal system, it is not uncommon for bankruptcy to negatively impact a wide range of people, including individuals, communities, and businesses of all sizes, both local and corporate. All in all, the fiscal policies of Detroit were ineffective and there were numerous reasons that lead to its economic failure. The Downtown Detroit Project is taking steps to reduce and possibly eliminate these threats of urban decay.

Building an Entrepreneurial Ecosystem

Through these economic struggles, Detroit has managed to begin piecing together the puzzle the recession left. As the pieces fell into place, something unimaginable began to appear: an entrepreneurial ecosystem. A world of businesses formed, both start-up and matured, run by the people who own or wish to be part of these businesses began to emerge. Unfortunately as we all know, it is not always easy to provide capital or enough creative ideas to innovate the mangled city, but that did not stop a man that embodies entrepreneurial spirit; Daniel Gilbert.

Dan_Gilbert

Known as the savior of Detroit,[Gilbert](https://en.wikipedia.org/wiki/Dan_Gilbert_(businessman) has gone above and beyond with aiding the city in its time of need. Gilbert, a Detroit Native, dedicated large amounts of his time, efforts, and capital to help his city rise after seeing it fall. A major contributing factor in Gilbert’s investments in the city is his love for business. At a young age Gilbert was captivated by business and knew that it was the life for him.

This life does not come easy, and Gilbert knew an opportunity would not just fall into his lap. Gilbert worked hard and now currently serves as the founder and chairman of both Quicken Loans and Rock Ventures. Quicken Loans is the nation’s second largest mortgage lender and Rock Ventures has over 110 partnering companies. These major companies began to see the light of day in 2010 when Dan Gilbert initiated his big move to the city of Detroit. Gilbert managed to move 1,200 team members of Quicken Loans to Michigan in a record amount of time. Once these team members flooded the city, the expansion of his empire throughout downtown Detroit began.

From investing roughly $1.3 billion in real estate, Gilbert owned and renovated nearly 60 properties in the inner city limits. This gave his new Detroit team a professional “playground” to work with. This playground consists of offices where space is utilized in a creative way and team members can come together, regardless of position in the company, and collaborate about innovative ideas4.

Although a playground sounds fun and exciting, creating it to be a positive work environment proved to be a challenge. Coming to a city of despair can be overwhelming for many non-residents. For Gilbert, on the other hand, this is an obstacle that can be overcome. If Governor Rick Snyder can confidently state Dan Gilbert “has a track record as a successful entrepreneur and innovator” due to the amount of progress that has already been made5. With the vision to synthesize a more stimulating city, the goal was to attract young and well-educated entrepreneurs. A cheap yet inspiring city that has an edgy and original tone is the perfect environment for these newcomers.

The reputation of the city, however, makes it difficult for newcomers to consider Detroit as a livable work environment. The image of the city is crucial to have an inviting feel. Blight is a major contributing factor as to why foreigners do not feel safe. Blight is defined as abandoned and rundown buildings. Detroit created a special task force to reconstruct the city. As each condemned and abandoned building gets updated, it’s one step closer to transforming Detroit into an entrepreneurial utopia6.

Having this utopia created was no accident. The Quicken Loans office showcases a full model scaled replica of the city. Each building or property is lit up as Gilbert purchase it. Detroit went from having 48 of the city’s largest office spaces unoccupied to having only 17 remaining unused. Also with employment boosting from 78,000-85,000 in only 4 years, there is much to be done to prepare the city for the number of residents that will follow those who have already joined this business renaissance movement7.

Being a Detroit resident is not about just living in the city anymore, it is about being part of the entrepreneurial experience and lifestyle. Needing approximately $45,000 annually to live comfortably in Detroit, the average cost of living is far lower than other major American cities8. New college graduates will come for the low cost of living but stay for the experiences. From the Cavaliers inspired basketball court within the Quicken Loans headquarters to the colorful office spaces, one will feel astonished yet instantly comfortable with the work environment and culture. Each team member that is added becomes a link in the chain, which makes the city stronger. The opportunities in Detroit are endless and due to the efforts Gilbert and many other for-profit and non-profit companies, the most compelling being Opportunity Detroit.

Background

Opportunity Detroit is a non-profit organization that promotes the awareness of Detroit’s story. It shows potential Detroit customers or businesses what the city has experienced in the past and how these lessons have impacted their future growth. The umbrella company under Rock Venture also publicizes the government officials and investors’ plan for downtown. Placing extreme importance on resident feedback, Opportunity Detroit’s vision is to provide Detroit residents with a city that is innovative and useful that agrees with their everyday lifestyle.

Implementation

The plan to revitalize the city has been portioned into six major sections of the city:

OD_Map

These six sections each have specific implementation plans in order to achieve the final goal for Detroit, centralized around one main vision; the transformation of Woodward Ave. into a “promenade” street. The promenade feel (“to walk” translated from French), simply means Detroit officials want to provide the citizens with a relaxing environment that will entertain them as they walk the streets.

The biggest factor Opportunity Detroit is considering when marketing to their target is the modification of the streets. The addition of sidewalk activation crossing signals and the M1-rail system will promote a highly-valued pedestrian environment. Encouraging Detroit citizens to walk in the city will turn them into potential customers of the young businesses that are currently thriving. Integrating food and beverage, entertainment, and retail shopping needs into the everyday lives of the citizens will give them a connection to the city as well. As the citizens continue connecting to the “Detroit pride” that not only radiates through the current residents, but through the promotion efforts of Opportunity Detroit, more people will begin to leave the outskirts and flock into the bustling city9.

This shift in lifestyle coincides with Opportunity Detroit’s most important factor to consider: recognize potential resident locations, build them to acceptable living conditions and fill them with residents. Capitalizing on the real estate market during this time is essential for Detroit to become profitable. As the city begins to repopulate with Michigan residents, more people will come from other parts of the country to offer their ideas and continue to bring opportunity.

Change can often be tricky to implement if not done correctly. However officials’ stress on “placemaking” ensures customer satisfaction. Essentially, placemaking gives citizens the opportunity to give feedback to officials in order to ensure that all of the modifications that are being achieved are accepted by the public. Giving residents the ability to comment during the process will ensure that spaces are provided to them that are easily accessible, engaging, comfortable and welcoming.

Through the previously successful implementations already in place, Detroit has every opportunity to succeed. It has history; Detroit is the largest and most recent city to declare bankruptcy in the United States to date. However, they have learned valuable lessons from their failures which gave them the capability to better execute their future vision for Detroit.

Opportunity Detroit’s promotion is a key factor in order for investors and official’s efforts to be seen. As the education of what is happening now in Detroit increases, people will begin to flock to this once “broken” city and transform it into its true potential: a unique and incredible opportunity.

REVITALIZATION THROUGH INNOVATION: LASELL STUDENTS TRAVEL TO DETROIT, LEARN FROM ENTREPRENEURS REBUILDING MOTOR CITY

  1. Auto industry decline, racial tension at the root of Detroit’s collapse. (n.d.). Retrieved November 12, 2014, from

    http://www.pennlive.com/midstate/index.ssf/201 

  2. United States Census Bureau. (n.d.). Retrieved November 12, 2014, from http://quickfacts.census.gov/qfd/states/26/2622000.html 

  3. A Better Solution for Detroit’s Blight. (n.d.). Retrieved November 12, 2014, from

    http://www.thefiscaltimes.com/Articles/2014/05/30/Better-Solution-Detroit-s-Blight 

  4. “Choose Thinking: A Blog by Dan Gilbert.” About Dan Gilbert. N.p., n.d. Web. 25 Nov. 2014. 

  5. “Dan Gilbert.” Chairman and Founder, Quicken Loans Inc. • Majority Owner, Cleveland Cavaliers. N.p., n.d. Web. 25 Nov. 2014. 

  6. “Gilbertville: A Billionaire’s Drive To Rebuild The Motor City.” Forbes. Forbes Magazine, n.d. Web. 25 Nov. 2014. 

  7. Sorge, Marge. Detroit Facts Economic Development Final 8-15-13 (n.d.): n. pag. Web. 

  8. “Cost of Living Comparison:Detroit, Michigan - Boston, Massachusetts.” Cost of Living Comparison: Compare Detroit, Michigan to Boston, Massachusetts. N.p., n.d. Web. 09 Dec. 2014. 

  9. About Us. (n.d.). Retrieved November 12, 2014, from http://opportunitydetroit.com/about-us/ 

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