Insight: Why Invest in Design? Insights from Industry Leaders

Design is playing an increasingly vital role in innovation, competitiveness and the determination of economic value. However, assessing the impact of design or isolating the design factor can be a challenge for a number of reasons. Design is an enabling discipline, and designers working with professionals from other disciplines add value to the process and to the end result. Design is also a crucial factor in many activities that successful organizations do well, from innovation and new product development, to operations and human resource management, to communications and branding. And like most serious organizational strategies, design is not a quick fix. It requires investment over time and commitment from organizational leaders in order to deliver significant returns.

To find out how successful organizations have managed design investment and how their leader think about innovation and design, the Design Industry Advisory Committee, working with the Martin Prosperity Institute at the Rotman School of Management, University of Toronto, conducted a series of videotaped interviews with industry leaders. Funding for this research was provided by Industry Canada, with additional support from the City of Toronto. The case study organizations are working at the cutting edge of innovation, and they are all internationally recognized in their industry sectors. The over-arching indicator of successful investment in design identified in this research is a long-term perspective on innovation. The interview subjects talked about the importance of investing for the long term and continuing to invest in design even in recessionary times. This long-term perspective enables other important activities to take place.

Exhibit 1 below shows the implications of the difference between investment patterns that are focused on the short-term versus the long-term. The figure is designed to be only representative but shows the difference over time of investment and the return on that investment. This figure was developed as a result of the discussions held with the various industry leaders. Specific examples as provided during the interviews are discussed in the research report.

The primary difference between the two approaches, not surprisingly, is in the timing. While the total amount invested may be the same, a short-term focus brings with it an expectation of not only faster returns but also a shorter more intense period for the initial investment. The long-term focus generally means a slower more gradual increase in the investment; but this allows for a more strategic approach to the innovation cycle, with designers and other experts integrated into the process at every stage. We learned from our industry leaders that their organizations continuously take the time to engage with users and respond to and anticipate their needs. They invest in early stage prototyping and testing, consider alternatives and refocus options along the way. They take the time to thoroughly investigate new technologies and materials.

The other advantage of taking a long-term focus as revealed in the interviews was that, while it might take longer for the return on the investment to develop, those returns would be larger and more sustainable. Of course, this is all highly context sensitive — taking a longer-term approach to something could be a matter of years instead of months, or months instead or weeks. The interviewees also talked about the importance of being focused and timely. The time taken is a trade-off that must be balanced. As the focus of this study was on understanding the business value of design, a longer-term perspective seems almost automatic. However, it came across so strongly in the interviews it is worth repeating.

Exhibit 1: Short-Term versus Long-Term Investment and Return


Short-Term versus Long-Term Investment and Return

Jeff Bayley, President and CEO, Canplas

“The paybacks at the start are slow, you make the most mistakes at the start. The product development process has a very, very long gestation period from inception of an idea to actually having it accepted in the marketplace. In our business it can be 10 years.”

Dr. Joseph Cafazzo, Executive Director,
Healthcare Human Factors, University Health Network

“[U]nfortunately what I’m observing in the Canadian market is very small start-ups and even larger companies that just don’t have the time or money to spend on this… But I am sympathetic to the fact that the use of Human Factors and our design process is a bit all-encompassing, so in some instances we wish we could work with more Canadian companies but most of our clients are multi-nationals out of Europe and the U.S.”

David Labistour, President and CEO, MEC

“So what differentiates us is that we’re not putting the profit into shareholders pockets, so we can think long-term, we can plan [out] 5 and 10 years, we can take a much longer net-present value view of [thinking] of investments, and our customer is our owner and our shareholder. So we are not beholden to different masters.”

David Feldberg, President and CEO, Teknion

“We’re very flexible, lean, owner-operated, so we can have a long-term view of life without a quarter-to-quarter distraction like some of our competitors have.”

Les Mandelbaum, President and Co-Founder, Umbra

“You can’t build a brand and develop a product on quarterly results. It makes you do things that are [for] short term profit, not necessarily long term. It doesn’t work for this kind of business model. It’s ok for other business models.”

Paul Rowan, Vice President Inspiration and Co-Founder, Umbra

“Design is at the centre of our business model. It can be the driver for every innovation in every different department.”

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View a short video of selected comments from the Industry Leaders

Insight: Venture Capital Investment and Startup Activity in Greater Miami and the So-Flo Mega-Region

Greater Miami has dramatically improved its ability to attract venture capital in 2013 over previous years, raking in more $300 million, ranking 16th among all U.S. metro regions.

The broader Southern Florida (So-Flo) mega-region that includes not just Miami and its environs but Tampa (with $150 million plus in venture investment) and Orlando ($75 million in venture investment) took in nearly $600 million, which would place it among the top dozen venture capital regions in the country, roughly comparable to Greater Chicago. The So-Flo mega-region is home to 15 million people and produces more than $750 billion in economic output, roughly the same as the Netherlands, placing it among the twenty largest national economies in the world.

The map below, based on an analysis of the latest Thompson Reuters data by Richard Florida and his team at the Martin Prosperity Institute at the Rotman School of Management at the University of Toronto, charts venture capital investment in greater Miami and all of Southern Florida in 2013. This surge in venture capital investment represents both a sea change and a tremendous opportunity for Miami and the South Florida region.

Exhibit 1: Venture capital investment (millions) by metro in Florida

Startup City Insight_MIAMI_Ex 01_500px


The second map (below) shows the location of venture capital investment across Greater Miami by zip code, allowing us to zero in more precisely on the attributes of the locations where venture investment and startup activity are clustering.

Exhibit 2: Venture capital investment (millions) by zip code in Metro Miami

Startup City Insight_MIAMI_Ex 02_500px

Across the metro area, Boca Raton accounts for the largest share of venture capital, more than $120 million across two zip codes ($93 million went to a single company, OpenPeak, an enterprise software developer). Coconut Grove accounted for $65 million, Hollywood’s take was $30 million, and Miami Airport’s (again across two zip codes) was almost $30 million.

Exhibit 3: Leading neighbourhoods for venture capital investment in the Greater Miami Metro

Startup City Insight_MIAMI_Ex 03_500px-new

Venture capital and startup activity across the United States has been in the midst of a back-to-the-city shift. For decades, venture capital and startup activity was mainly located in suburban office complexes, like Silicon Valley California, the Route 128 technology corridor in suburban Boston, and suburban Seattle where Microsoft is located. But over the past several years, as cities and urban centers have become more attractive places to live and work, venture capital and startup activity has started to come back to the city as well. According to a major report released today by Richard Florida and his MPI research team, urban areas in San Francisco now attract more venture capital than Silicon Valley and Lower Manhattan has emerged as a significant start-up center. Techies and entrepreneurs are increasingly choosing to live in denser, livelier, more diverse locations. By locating in urban neighborhoods startups can be closer to talent and also leverage existing amenities and services, from restaurants to health clubs and day care, instead of providing those services themselves. Older industrial and warehouse buildings provide the open plan layouts these companies and their workforces desire, where employees can walk, bike or use transit to get to work.

The table below shows the leading neighborhoods for venture capital investment and startup activity in Miami-Dade County. While there is a major cluster of activity out near the Miami Airport, the majority of neighborhoods are either in walkable suburbs such as Coconut Grove (33133) and Miami Beach (33139), or in close proximity to downtown, such as North Brickell Downtown (33131), South Brickell (33129), and Edgewater-Morningside (33137).

Exhibit 4: Leading neighborhoods for venture capital investment in Miami-Dade County

Startup City Insight_MIAMI_Ex 04_500px

Miami is well positioned to take advantage of the urban shift in venture capital and startup activity. It has the old industrial spaces and art districts like Wynwood that have been home to the arts and creative community and where incubator spaces such as Lab Miami are located, as well as the first U.S. branch of the global entrepreneurial assistance initiative Endeavor.

In cities like San Francisco and New York, the urban tech explosion has occurred in a dramatic way that has created tremendous pressure on real estate, radically changing the character of old neighborhoods and sparking significant backlash.

Miami has the opportunity to learn from this. It has the space required for urban neighborhoods to absorb entrepreneurial startups without being overrun by them. And it has the chance to
develop a long-run plan for making urban startups part of a broad strategy for more
inclusive growth.

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Related: Insight: Startup City 

Insight: Startup City

High tech startups are taking an urban turn. Manhattan and Brooklyn, downtown San Francisco, and Santa Monica are all becoming tech hubs.

Venture capitalists themselves have always been found in large financial centers. But, historically the high tech startups they funded were mainly, if not exclusively, located in suburban “nerdistans” — the sprawling office parks of Silicon Valley, Boston’s Route 128 corridor, and the suburbs of Austin and Seattle, where Microsoft is located. In recent years, high tech development, startup activity, and venture investment have all been growing in the urban cores of major cities.

This Insight summarizes the key findings from our first major report on the rise of startup cities. The report, Startup City: The Urban Shift in Venture Capital and High Technology, tracks the increasingly urban geography of high tech startups backed by venture capital. It is based on unique data provided to us by the National Venture Capital Association, Thompson Reuters and Dow Jones.

Exhibit 1: Venture capital investment by metro



Exhibit 1 maps venture capital investment by metro. San Francisco is the leading metro, topping even Silicon Valley (San Jose). There is also a considerable amount of venture capital investment along the Boston-New York-Washington corridor, and Southern California from Los Angeles to San Diego. Other smaller but still significant locations for venture investment include Seattle, Austin, and Chicago. And, a number of smaller college towns like Boulder, Colorado; Ann Arbor, Michigan; and Lawrence, Kansas do well on venture capital on a per capita basis, though generally speaking, our analysis finds that venture capital investment is concentrated in denser, more compact, knowledge-based metros.

Startup City examines unique data on the distribution of venture capital and startup activity between cities and suburbs for 11 leading metros. The map in Exhibit 2 presents the venture funding received by zip code for one of these leading metros: the Bay Area, including San Francisco and Silicon Valley. The biggest dots indicate that the greatest volume and concentration of venture capital activity investment are in and around the center of San Francisco. The two leading zip codes are urban districts that include large swathes of San Francisco’s waterfront, running south from the central financial district.

Exhibit 2: Bay Area venture capital investments

sf_ bay_dollars_150_500px


Exhibit 3 shows the share of venture capital investment going to the major center cities versus the walkable suburbs and other areas. The center city accounts for more than 80 percent of venture investment in three metros, New York, Austin and San Diego. It accounts for two-thirds in Seattle. It makes up roughly half in Greater Washington D.C and Baltimore and nearly half in Chicago. When Cambridge is added together with Boston, the two cities account for more than half of venture investment in the region. Palo Alto and San Jose combine for nearly 40 percent of all venture capital investment in Silicon Valley. And, together Santa Monica and LA account for almost 37 percent of the region’s total venture investment.

Several factors lie behind the urban turn in venture capital and high tech startups. Access to talent is key. Larger shares of techies are drawn to urban environments. And as the venture capitalist Fred Wilson has noted, the new generation of tech talent sees themselves as creative artists as much as engineers or entrepreneurs; as such they are more likely to be urbanites than suburbanites. Urban areas also provide more efficient locations for smaller startups which can leverage the services and amenities that cities provide. “I love the idea of an urban corporate campus with all the energy and variety that provides,” Twitter co-founder Jack Dorsey tweeted last February, after opening his company’s new headquarters in a newly renovated Art Deco building in San Francisco’s downtown. The changing nature of technology is also an important factor. Many tech startups use marketing or social media applications, or work with multi-media (games, music, and so on). Urban talent pools are richer in those skills than suburban ones.

Exhibit 3:  Share of venture capital investment going to center cities, walkable suburbs and other suburbs

VC Investment_Major vs Suburbs_14-02-26


This urban turn in venture capital and high tech startups reflects the longstanding role of cities as crucibles of creativity and innovation. The suburban nerdistan may well have been a historical aberration as the locus of innovation and entrepreneurship shifts back to the great urban centers that have served as their true catalysts all along. 

Read the full report here.

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Insight: Venture Capital Investment and Startup Activity in Greater Miami and the So-Flo Mega-Region

The Mega-Regions of North America

by Richard Florida

Cities have always been the natural economic units of the world. But over the past several decades, clusters of cities and city regions have grown outward and into each other, forming mega-regions. More than just a collection of cities or one giant city, a mega-region is greater than the sum of its parts.

The earliest iteration of the idea of a mega-region dates back to 1957, when the economic geographer Jean Gottman coined the term “megalopolis” to describe the emerging economic hub that was the Boston-to-Washington corridor (he would publish a book with that title in 1961). Derived from the Greek and meaning “very large city,” the term came to be applied to a number of other regions: the great swath of California stretching south from San Francisco to San Diego; the vast Midwestern megalopolis that extends east from Chicago through Detroit and Cleveland and south to Pittsburgh; and the bustling Tokyo-Osaka region of Japan.

In 1993, the Japanese management expert Kenichi Ohmae wrote an influential Foreign Affairs article that argued that the globe’s natural economic zones, or “region states,” some of them crossing international boundaries, had replaced nation-states as the economic organizing units of what he famously dubbed the “borderless world” (his book, The End of the Nation State, followed two years later).

My own research, conducted with Timothy Gulden and Charlotta Mellander and published in 2007, identified the boundaries of these global mega-regions by using satellite images of the world at night. We defined a mega-region as a contiguous lighted area with more than one major city or metropolitan region that produced more than $100 billion in economic output. A 2009 report from the Regional Planning Association applied specific criteria of density, population, and economic growth at the level of counties to identify the major mega-regions of North America.

Exhibit 1: Mega-Region Population

Mega-Region Population

This report uses metro level data to provide a portrait of the populations and economic outputs of the twelve mega-regions in the U.S. and Canada (comparable data for Mexico were unavailable). Population data are from the US Census Bureau American Community Survey and from Statistics Canada. The data on economic output for both U.S. metros and nations are from the most recent Metro Economies Report from the U.S. Conference of Mayors; Canadian data are from the Montreal Chamber of Commerce. Karen King and Zara Matheson of the Martin Prosperity Institute compiled the data and Matheson created the maps.

The Bos-Wash mega stretches some 500 miles down the East Coast, from Boston through New York, Philadelphia and Baltimore, to Washington, DC. It is home to 56.5 million people, more than 18 percent of all Americans, and generates $3.75 trillion in economic output, more than Germany. If Bos-Wash were a separate country, it would be the fourth largest nation in the world, behind only the U.S., China, and Japan.

Continuing from largest to smallest by population, Chi-Pitts extends north and west from Pittsburgh through Cleveland, Detroit, Indianapolis, Chicago, and Minneapolis, taking in more than 50 metros in all. This vast mega-region is home to 41.8 million people and generates $2.3 trillion in output. That makes it just a bit smaller than the United Kingdom, about the same size as Brazil, and bigger than all of Russia – equivalent to the world’s seventh largest nation.

Exhibit 2: Mega-Region Economic Output (Billions)

Mega-Region Economic Output

Home to 22 million people and with more than a trillion in economic output, Char-Lanta takes in 45 metros, including Atlanta, Raleigh, and Birmingham. Its economy is bigger than South Korea’s, placing it among the world’s fifteen largest economies.

So-Cal runs from LA through San Diego and is home to 21.8 million people and also generates more than one trillion in economic output (this mega also spills across the Mexican border into Tijuana and is thus even larger). Even excluding its Mexican component, its economy is bigger than all of Mexico’s and just a bit smaller than Spain’s, also placing it among the world’s fifteen largest economies.

So-Flo takes in the entire swath of Florida that includes Miami, Orlando and Tampa. It is home to 15 million people and produces more than $750 billion in economic output, making it about the same size as the Netherlands or Turkey. It too would rank among the world’s twenty largest economies.

Nor-Cal includes San Francisco, San Jose, Oakland and 14 other metros surrounding San Francisco Bay. It has a population of 13 million people and produces more than $900 billion in output, roughly the same as Indonesia and more than Turkey, also landing it among the world’s twenty largest economies.

Tor-Buff-Chester stretches north from Buffalo, and Rochester, taking in Toronto, Ottawa and Montreal in Canada. With a population of more than 16 million,1 it generates output of nearly $600 billion, more than Sweden’s, placing it among the world’s 25 largest economies.

Dal-Austin encompasses Dallas, Austin, and San Antonio, Texas. Its population is just under 12 million. It produces more than $700 billion in economic output, more than Sweden and or oil-rich Saudi Arabia, also ranking it among the 25 biggest economies in the world.

Hou-Orleans, the great energy-producing belt that stretches from Houston through Mobile, Alabama to New Orleans, is home to more than 10 million people. It produces more than $750 billion in economic output, about the same as the Netherlands, placing it among the world’s 25 largest economies.

Some researchers have suggested combining Houston, Dallas-Ft. Worth and Austin into a single “Texas Triangle,” a mega of 20 million people and $1.5 trillion in economic output, comparable to Australia and just a bit smaller than India and Canada.

Exhibit 3: Mega-Regions Compared to Countries (GDP Billions)

Mega-Regions Compared to Countries

The Cascadia mega-region, which stretches up from Portland, Oregon through Seattle and into Vancouver, Canada, is home to nearly 10 million people. It generates economic output of about $600 billion, comparable to Switzerland, also placing it among the world’s top 25 nations.

Phoenix-Tucson is home to more than 5 million people and generates economic output of more than $250 billion, just slightly less than Hong Kong, making it one of the fifty largest economies in the world.

Finally, Denver-Boulder has 4.2 million people and $256 billion in economic output, more than Finland, Greece or Ireland. If it were a nation, it would also rank among the world’s 50 largest economies.

All told, these dozen mega-regions span 243 metropolitan areas in the U.S. and Canada, more than six in ten of all U.S. metros. They have a combined population of more than 230 million people, including 215 million from the United States or 70 percent of the U.S. population. Together, they produce more than $13 trillion dollars in economic output, equivalent to three-quarters of America’s total GDP.

Exhibit 4: Key Facts on North America’s Mega-Regions

Ex04_Mega-Regions Table_500px

1 This estimate is low as it includes only larger Canadian metros.

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The Martin Prosperity Institute at the University of Toronto‘s Rotman School of Management is the world’s leading think-tank on the role of sub-national factors — location, place and city-regions — in global economic prosperity. We take an integrated view of prosperity, looking beyond economic measures to include the importance of quality of place and the development of people’s creative potential.

Insight: Creative Cities India

In September 2012 the Martin Prosperity Institute partnered with the Institute for Competitiveness (the Indian partner of the Institute for Strategy and Competitiveness at the Harvard Business School) to start the Prosperity Institute of India. The MPI contributes to this partnership by engaging in research with the objective to help enhance current and future prosperity and competitiveness in India by examining the regional role of the creative economy. This began with the release of the Understanding the Creative Economy in India report which examined the current extent of the Creative Economy within India at the State and Union Territory level. Since then we have expanded our analysis to smaller geographic regions by analysing the creative economy in cities within India. Our new report Understanding the Creative Economy in India’s Cities presents some of the analysis and results from this research.

In 2007 a geographic shift occurred that saw for the first time the majority of the global population living within urban areas. This shift was part of an overall global trend towards urban population growth, but was fueled by the large rate of urban growth in highly populated, traditionally rural countries such as China and India. For example, Delhi, India’s largest city saw a 20.96 percent growth rate over the past 10 years. There are now more than 30 Indian cities with populations above 3 million and much of this growth has been fuelled by the urban economy. It is expected that by 2030 India’s cities could create the majority of all new jobs and the national GDP. With this large scale population and economic growth, it was important that we analyse the role of the Creative Economy in India.

The report examines the Creative Economy at the city level through the application of the Creativity Index and the Three T’s of economic development methodology. The cities used within the report are India’s 50 most competitive cities as determined by the Institute for Competitiveness. Due to a lack of comparable data at the city level, the metrics for the three indices used within this report are different from the state report. The metrics used are not ideal but are the best available. For a full description of the data used please refer to the full report.

Previous MPI Insights have shed light upon the creativity of entrepreneurs within India and their ability to create products that uniquely address certain needs through Jugaad innovations such as the MittiCool clay products or advanced IT projects such as redBus. Much of the documented innovation taking place in India is being found within its large cities. While the human capital share in these cities is quite low, there are many residents that do not hold a BA+ that are helping the urban economy grow, which is why it was crucial for us to examine Creative Class (CC) occupation shares. Exhibit 1 presents the CC share for the top 50 most competitive cities within India. When compared to other countries Indian cities generally have smaller CC shares, but due to a large informal economy and from data limitations, these numbers could be larger. Within India the cities found to have the largest CC shares are generally the larger urban centers such as Delhi, Hyderabad, and Pune. A number of smaller cities in regions such as Kerala and Punjab have also been able to develop their creative economy as they have comparably high CC shares. As Exhibit 1 also displays generally the cities in the Northern or Southern part of the country have the highest CC shares, while the cities within the middle of the country in traditional rural areas have the lower shares.

Exhibit 1: Creative Class Share




Exhibit 2: Creativity Index

Exhibit 2: Creativity Index

Essential to CC theory is not only the CC share, but the Creativity Index which is an overall measure of regional economic potential that combines the three T’s of economic development (Talent, Technology and Tolerance). Exhibit 2 presents the Creativity Index for the 50 Indian cities. Mumbai was found to have the highest Creativity Index, followed by: Bengaluru, Delhi, Kolkata, Hyderabad, Chennai, Thiruvananthapuram, Pune, Kochi, and Ludhiana. As seen with the CC share, once again some of the smaller cities in states such as Kerala have quite high Creativity Indices as Thiruvananthapuram and Kochi were ranked 7th and 9th respectively. Overall though the strength of the large urbanized cities within India in regards to their quality of place, technology and talent have propelled them within the creative economy as the six largest cities have the six highest Creativity Indices. These large cities provide a great example of how India is transitioning within the knowledge economy and how this transition is being fuelled by the more urbanised, tech driven and talent cities.

Our previous MPI report on India shed light on the extreme divide between the urban and rural States and Union Territories within the country. While this Insight has displayed that there are numerous smaller cities that are performing quite well in the creative economy, a divide is still present. The link between scale and performance is noticeable as the large cities within India that are urbanising at a rapid pace are the regions that are leading the way in regards to quality of place, talent and technology, and positioning their potential within the knowledge economy well ahead of the rest. That being said, most of the cities examined have been experiencing recent urban growth and if the larger more urbanised cities have provided an accurate benchmark, then the others are most likely headed in the same direction. We here at the MPI will continue to examine the role of the creative economy within India as this is the second report in our ongoing series in partnership with the Prosperity Institute of India.

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The Martin Prosperity Institute at the University of Toronto‘s Rotman School of Management is the world’s leading think-tank on the role of sub-national factors — location, place and city-regions — in global economic prosperity. We take an integrated view of prosperity, looking beyond economic measures to include the importance of quality of place and the development of people’s creative potential.

Insight: Class and Education – Austin and Cleveland … and Pittsburgh

This Insight is the seventh in the Martin Prosperity Institute’s continuing Geography of Class and Education Insight series. The two metros examined this week are Cleveland and Austin, which as in many of the previous posts provide a great juxtaposition to each other. While both metros have similar populations, the City of Cleveland has been experiencing population decline over the last 4 decades, while the City of Austin has experienced the exact opposite. Due to the population growth in the City of Austin, its population is now double that of the City of Cleveland. In both cases, the towns within the metro that are outside of the city contribute to a greater amount of the metro population than the central cities themselves. We also decided to add a third city to the end of this Insight, which is Pittsburgh, as we believe that it would provide an example of a metro that is situated between that of Cleveland and Austin in the knowledge economy.

Exhibit 1: Cleveland – Share of population 25+ with a BA or above

Click for full screen map.

Known in its past as one of the manufacturing capitals of the U.S., Cleveland was a city that attracted many workers during its industrial boom. After deindustrialization took place though, Cleveland has become synonymous with the rust belt and urban industrial decay. Recently much has been discussed about an urban resurgence taking place in Cleveland, similar to that in Detroit, as the city has invested in improving its urban infrastructure in the hope of bringing people back into the city. Exhibit 1 displays the class and education map of metro Cleveland and as shown, it is apparent that the City of Cleveland is facing some challenges. Almost all of the City of Cleveland is shaded light red or light blue, indicating low educational attainment and primarily Service Class (SC) or Working Class (WC) occupations within the tracts. This extends outside of the city into the metro as there are many tracts that also have very low degree shares. There is a small patch of highly educated Creative Class (CC) tracts in the downtown core and to the east of the core in the university circle neighbourhood. This is similar to some of the other cities that we have looked at like St Louis in which the only highly educated tracts within the city limits are found right downtown and by a university.

Exhibit 2: Austin – Share of population 25+ with a BA or above

Click for full screen map.

Displayed in Exhibit 2 is the class and education map for Austin and at first glance, the results look extremely different from our Cleveland results. Primarily, when looking within the city and metro of Austin, the results are almost an inversion of Cleveland. Where the city of Cleveland was primarily demarcated by light red and blue, the City of Austin is almost all dark purple. This is a testament to the growth of the creative and knowledge economy within the City of Austin. Austin is well recognized as one of the best places for business and careers, technology and according to Forbes; Austin was the number 2 place for job growth in the U.S (2012). Austin is not only a place in which highly educated Creative Class (CC) occupations are thriving, but art and music have always been an essential part of Austin’s economy. There are numerous light purple tracts within the city and metro, indicating lower education levels, yet primarily CC. This is possibly due to an influx of artists and musicians within the area, and in Austin there are lighter purple tracts than many of the cities that we have looked at. In the eastern parts of both the city and metro we find lower and medium education levels and, primarily SC tracts, but not as many as were found in Cleveland. What is also interesting is that thanks to Dell and numerous biotech manufacturing companies within the metro area, there are also numerous primarily WC tracts within Austin, which is often forgotten when thinking of the region as a tech centre.

Numerous publications from MSN to Forbes have discussed Pittsburgh as becoming an emerging boomtown and hotspot for tech companies and educated individuals similar to that of Austin. With a similar population to both Austin and Cleveland we felt that it would be interesting to add a third metro to this Insight, to see how Pittsburgh actually looks from an educational and occupational perspective.

Exhibit 3: Pittsburgh – Share of population 25+ with a BA or above

Click for full screen map.

The class and education map of Pittsburgh shows that while the metro does have numerous highly educated CC and SC tracts, it is nowhere near the same degree of that in Austin. While there is a cluster of highly educated tracts within the downtown, once again like in Cleveland, many of the highly educated tracts in Pittsburgh are found just outside of the city borders. The map also shows that the city has almost fully transitioned from its steel city past as there are very few primarily WC tracts left. One thing that is quite interesting though within the Pittsburgh map is that there are many lightly shaded CC tracts, indicating that art and other related occupations could have a strong presence within Pittsburgh to a greater extent than many of the other metros that we have looked at.

When looking at the three maps, three very different results are displayed as the cities are quite unlike each other. The only similarity, which may come as a surprise (at least in Austin) is that each metro has about the same number of primarily WC tracts. When looking at education levels, it is easy to see that Austin is highly educated, especially when compared to Cleveland and Pittsburgh. The total degree shares for each metro are as follows: Austin 39.13%, Pittsburgh 27.39%, and Cleveland 25.8%. The most educated tracts within Austin, Pittsburgh and Cleveland were found to have degree shares within the 70-80% range. The difference is in the, much larger total number of tracts within this degree share range in found in Austin compared to the two other metros, as Cleveland for example only has 4 tracts with degree shares higher than 50%, which is the lowest number of any metro that we have looked at so far. Pittsburgh though is in between the other two metros as there are a greater number of tracts with very high degree shares than Cleveland. Where Pittsburgh is more like Austin is when looking at the tracts with the lowest degree shares. Unlike many cities that we have looked at, in both Austin and Pittsburgh, the tracts with the lowest degree shares hold shares much higher than that at the bottom of other metros. For example there are only 2 and 3 tracts respectively within Austin and Pittsburgh that have degree shares under 5%, which is quite unique.

While Pittsburgh has made strides within the creative economy and currently seems to be much better situated within the creative and knowledge economy than Cleveland, Pittsburgh is still far off from what we see in Austin. This Insight has displayed that the divide between metros in the U.S. across education and occupation is quite large and that even cities such as Pittsburgh that have made positive strides in better situating themselves in the knowledge economy remain very different from the leaders.

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The Martin Prosperity Institute at the University of Toronto‘s Rotman School of Management is the world’s leading think-tank on the role of sub-national factors — location, place and city-regions — in global economic prosperity. We take an integrated view of prosperity, looking beyond economic measures to include the importance of quality of place and the development of people’s creative potential.


Insight: Big City – Big Ideas

On November 4th 2013, The University of Toronto’s School of Public Policy and Governance in Partnership with the Martin Prosperity Institute presented the first talk in the Big City: Big Ideas Speakers Series. Big City: Big Ideas is a public lecture series that allows global leaders in urban and regional planning, policy and finance to present their big ideas for the City of Toronto. MPI Director Richard Florida was the first speaker in the series and his talk, entitled, “Why Creativity is the new Economy” discussed Toronto’s current situation within the creative economy.

The presentation communicated much of the work that the MPI has completed on the role of the creative economy in the City of Toronto. This is of importance; Richard explained in his presentation that Toronto is at a critical inflection point due to a broken municipal governance system. Toronto’s current growth model is very limited as a result of this system. With a population of over 5 million people and growing, the city is in need of new patterns of infrastructure investment, new regulations (building and zoning), and other methods to deal with the large scale growth, that the current government structure cannot deal with.

Currently the City of Toronto is not only experiencing total population growth, but growth within the knowledge economy as well, making Toronto one of the best positioned cities in the world to thrive within this new economy. According to 2006 statistics (the loss of the long form census makes more recent data unavailable), the Creative Class (CC) makes up 34.3% of metro Toronto’s population (nearly 1 million people), almost half of the total Creative Class in Ontario and 20 percent of Canada’s total CC share. Not only does Toronto have a high CC share, but also a great mix of educated and non-educated CC members, along with very high foreign born and visible minority shares. This mix of different people across numerous occupations, backgrounds and education levels is one of the reasons why Toronto is so well positioned within the knowledge economy as creativity thrives on diversity. This has led to economic success as the Toronto metro is responsible for 20% of Canada’s GDP, or $300 billion, which is the 10th highest GDP in North America.

Exhibit 1: Media Household Income


While the City of Toronto has experienced success within the knowledge economy, many issues face the city and threaten its future prosperity. These are the issues that the current municipal structure is unable to adequately deal with, as Richard explained during the presentation. While there is a large CC presence in Toronto, the Service Class (SC) makes up for a larger share of the occupational population, with about 45% percent of the workforce, or 1.5 million workers in 2012. SC occupations have grown by 33% from 2001-2012, and as it stands 38.1% of routine service workers are either at or below the low income cut-off of $23,647. As a previous Insight presented, many SC occupations are precarious low wage jobs in which the work schedule is often part time. Income inequality has grown in Toronto to a higher level than the rest of Canada. This inequality has a geographic dimension in which most of the residents with the lowest incomes live in “inner suburbs” that are poorly serviced by transit and other services, and have high visible minority populations. While this divide is apparent and growing, it is still not as large as the divide found in American cities. Inequality is growing and must be addressed within Toronto in so that the gap is reduced. Exhibit 1 presents the Toronto metro based on occupational share and income for 2006. The map is labelled using quartiles in the same format as our previous class maps found here. As the map shows, a distinct geographical gap appears within the metro by occupational class and income level.

The presentation ended with Richard suggesting some recommendations for Toronto going forward, highlighted by the need for a new model for sustainable prosperity in the city. This can to be done, he explained, by upgrading service work to a level that provides a comfortable lifestyle, as manufacturing jobs did after the Second World War. Sustainable prosperity also needs to be examined at smaller geographic units within in the city as increased inequality shows a strong spatial component. Easy fixes such as better transit, infrastructure, affordable housing, increased density and greater regional connectivity are all necessary steps in reaching this goal, which our current governance structure does not have the power to do. Overall, the presentation provided the public and policy makers with new ideas for how Toronto can continue to grow and experience prosperity. The Big City: Big Ideas speaker series will continue to hold presentations going forward.

Some of the tweets that took place from attendees are presented in Exhibit 2. For a full list of the tweets, click the following link. To watch the entire video presentation follow this link.

Exhibit 2: Selected tweets




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The Martin Prosperity Institute at the University of Toronto‘s Rotman School of Management is the world’s leading think-tank on the role of sub-national factors — location, place and city-regions — in global economic prosperity. We take an integrated view of prosperity, looking beyond economic measures to include the importance of quality of place and the development of people’s creative potential.

Insight: Trick, or Treat? The 2013 Halloween Index

Tonight, children across America will be out trick-or-treating, a unique activity in that it is one of the only annual events left in our communities that can draw entire neighbourhoods together. For the third year now, along with the Atlantic Cities we have compiled the metros that will provide the best environment for trick or treating this year.

Exhibit 1: Halloween Index – 2013



The Index is made up of five variables that are integral to a successful Halloween: candy stores (per 10 thousand), costume rental stores (per 10 thousand), children aged 5–14 (share of metro population), population density and median income. Once again, the metro with the greatest population density is New York, allowing for the greatest amount of trick or treating per square mile. San Jose remains the metro with the highest median income, and Ocean City, NJ has the greatest amount of candy stores per 10,000 people. Jackson, TN now has the largest amount of costume stores per 10,000 and Provo, UT now has the largest share of kids between five and fourteen.

Exhibit 2: Top 25 best places for Halloween



None of these metros though were found to be the best place to trick-or-treat in America though, as the new metro with the highest Halloween Index is Poughkeepsie, NY. Poughkeepsie scored fairly well on each variable in the Halloween index, but received its highest scores in regards to median household income and costume stores per 10,000. This southern New York state metro is also one of the most densely populated metros in the U.S., with a population density that is much higher than the U.S. metro average. The composition of Poughkeepsie should not only provide children with quality trick-or-treating, but the opportunity to reach a large number of houses over the evening. The other metros within the top ten are: Chicago (last year’s winner); Trenton, NJ; Bridgeport, CT; San Jose, CA; Colorado Springs, CO; Omaha, NE; Honolulu, HI; Denver, CO; and Manchester, NH. The top 25 are presented in Exhibit 2, and once again the metros on the list are primarily a mix of large and medium sized metros.

No matter where you are trick or treating tonight or whether you are a kid or a kid at heart, please be safe and have fun!

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The Martin Prosperity Institute at the University of Toronto‘s Rotman School of Management is the world’s leading think-tank on the role of sub-national factors — location, place and city-regions — in global economic prosperity. We take an integrated view of prosperity, looking beyond economic measures to include the importance of quality of place and the development of people’s creative potential.

Insight: Chicago, Detroit, Toronto — Three Peas in Three Different Pods

On July 18, 2013, the City of Detroit filed for Chapter 9 bankruptcy, making Detroit the largest city in U.S. history to file for bankruptcy. The trials and tribulations of Detroit’s history have been well documented, as the once booming manufacturing center has fallen so far from what it once was. Detroit is now synonymous with urban decline as the flight of manufacturing and population from the city has taken place at a rapid rate. Despite this, as previous Martin Prosperity Institute Insights and Atlantic Cities posts have outlined, the Detroit metro has experienced per capita GDP growth over the past ten years, and since the recession, has experienced one of the highest per capita GDP growth rates in the U.S. (4.45% from 2009–2012). This disparity is partially the result of a metro area that is much different than the city itself. To get at this we at the MPI decided to examine the relationship between metro Detroit and its city center in relation to two other metros, Toronto and Chicago. We will be releasing other Insights in this Detroit-Chicago-Toronto series that look at different attributes, but we wanted to release this Insight in conjunction with ERA Architects Detroit-Toronto symposium where MPI Research Director, Dr. Kevin Stolarick, is presenting, taking place today.

Exhibit 1: Detroit – Household Income detroit_income_500px Exhibit 1 presents a comparison of 2010 average (mean) household income for each census tract in the Detroit metro, compared to the national U.S. average (mean) for that year. Every tract that is highlighted in red was found to have a household income below the national average, and every tract that is green, had a higher household income. The City of Detroit’s boundaries are outlined within the metro map. What first comes to mind when looking at this map is that most of the census tracts within the City of Detroit have a household income below the national average. In fact 95.5% of the land area within the City is below the national average. When looking at the metro as a whole though, most of the tracts or 78.5% of the total land area have a household income above the national average. While some of the immediate suburbs of the City of Detroit are highlighted red, most of the surrounding areas seem to be in good economic standing, as the average household incomes are quite high. It is clear when looking at this map, that there is an extreme divide between the city and the surrounding municipalities, but is this a uniquely Detroit problem?

Exhibit 2: Chicago – Household Income Chicago_Income_500px Somewhat surprising, the map of the Chicago metro in Exhibit 2 shares a similarity with the Detroit metro map. The main similarity is the large number of red tracts, indicating an average (mean) household income lower than the national average, throughout the central city and the immediate suburbs. While the entire City of Chicago is nowhere near as red as Detroit, the tracts that are in red do comprise 62.2% of the total land in the City. In Chicago what we are seeing is a compact downtown that has a very high average household income, but large lower density inner suburbs that take up a lot of space and that have very low average incomes. While there are also some red highlighted tracts in the metro are that immediately surround the city, the green tracts make up for 84% of the total land in the Chicago metro. Once again we see a city-metro divide, but nowhere near as strong as in Detroit.

Exhibit 3: Toronto – Household Income Toronto_income_500px The third map (Exhibit 3) shows the results for Toronto in 2006 (the most recent year that this data is reliably available) against the Canadian average household income. From first glance, it is clear that fewer tracts within the Toronto metro have an average household income lower than the national average, especially when compared to Detroit and Chicago. Despite this though, there is once again a reoccurring trend, in which most of the tracts with average household incomes below the national average are found within the city itself. Outside of the City of Toronto there are almost no tracts shaded red. As in Chicago, many of the tracts with below average household incomes are in the inner suburbs, and take up a large amount of space geographically. The red tracts in Toronto make up for 36% of the total land in the city. This is a significant amount of the city, but not as large as in Chicago and nowhere near the same amount as in Detroit. As this map presents, the Toronto metro and City of Toronto are generally better off than the rest of Canada, and although income inequality in Toronto has been discussed to great lengths, this map displays that in relation to the national average, Toronto performs much better than other large cities.

Exhibit 4: Detroit-Chicago-Toronto-Insight_Ex04 Exhibit 4 shows how much land area in terms of a percentage of the total area and actual square kilometers that the tracts that are either above or below the national average household income contribute to in each metro and city. When looking at the average household income of these three cities and metro areas in relation to each other, it is easier to see why the City of Detroit is in its current situation. In the City of Detroit where the census tracts with an average income less than the national average takes up 95% of the total land, it is very difficult to provide the necessary services across this vast geography to the lower income residents that need them. Especially in many of the inner suburbs of Detroit where density is low, it can be very difficult for a municipality to receive sufficient tax and other revenues, balance their budgets, and provide necessary services. Combine these with a shrinking tax base and lower population density and you have the current situation in the City of Detroit. The Detroit problem is almost exclusively a city of Detroit problem, not a metro one as outlined in Exhibit 1. While the initial results for the City of Chicago show that the city is quite different from Detroit in regards to average household income, these results provide a small warning sign to Chicago as their situation is also much different from Toronto’s, which is a similarly sized city. Cities will need to recognize that metro performance is not an adequate measure of city performance as seen in the case of these three cities. With growing poverty in large geographic inner suburbs, cities like Chicago, Detroit, and even Toronto will face structural and fiscal problems in trying to provide services while balancing their budgets. We are also examining these three cities across numerous other indicators and over an extended period of time, which we will be releasing a whitepaper and other Insights that present all of our results. For this Insight we used household income data for 2010 for Chicago and Detroit, and 2006 household income data for Toronto.

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The Martin Prosperity Institute at the University of Toronto‘s Rotman School of Management is the world’s leading think-tank on the role of sub-national factors — location, place and city-regions — in global economic prosperity. We take an integrated view of prosperity, looking beyond economic measures to include the importance of quality of place and the development of people’s creative potential.

Insight: Livability

“The place we choose to live affects every aspect of our being. It can determine the income we earn, the people we meet, the friends we make, the partners we choose, and the options available to our children and families.”
– Richard Florida: Who’s Your City?

More than ever, the decision of where to live has become one of the most important decisions we can make, as it can influence numerous aspects of our lives. Recently, more and more factors are influencing this choice, as employment is not always the primary reason for many. Amenities, housing values, demographics, infrastructure, walkability and many other attributes, can influence this decision, and since people, are the greatest form of capital through their knowledge and creativity, many regions are trying to develop their communities to attract this hot commodity. aims to help individuals with this important decision by exploring what makes small to mid-sized cities great places to live, work and visit, by examining numerous attributes from cultural amenities and sustainability to walkability and transportation. Recently we partnered with to create a list of the Top 100 Best Places to Live for 2014. This Insight presents the results from this project.

For the 2014 Top 100 Best Places to Live we calculated an overall Livability Score for each small to medium-sized city (with a population less than 350,000) within the U.S. and from this determined the top 100 cities. The list presents the top 100 cities, not metros in the U.S. The Livability Score was generated from a variety of data in numerous categories that was combined to create the overall score. The categories are as follows: Economics, Healthcare, Social & Civic Capital, Education, Amenities, Demographics, and Infrastructure. Within each of these categories, data from many sources was combined to create a score for each category. For a full explanation of the metrics please look to the report’s explanation found here.

According to our Livability Score, Palo Alto, California is 2014’s Best Place to Live in the US. Home of Stanford University, numerous Tech companies and beautiful amenities, Palo Alto scored the highest partially thanks to very high Education and Amenities scores. Palo Alto barely beat out Boulder, Colorado and Berkley, California for the top spot, as both Boulder and Berkley also scored highly in regards to Education and Amenities. The top ten is rounded out by a variety of cities from numerous states including: Durham, NC; Miami Beach, FL; Rochester, MN; Salt Lake City, UT; Eugene, OR; Reno, NV; and Rockville, MD. Within the top ten, most of these cities were found to have fairly even scores across all of the categories, with Healthcare, Education and Amenities receiving fairly high scores. Where these cities received lower scores was generally in regards to Housing and Economics. These two categories encompass a broad range of indicators from affordability and housing costs to income inequality, which is why some of the top ten Best Places to live received lower scores in these categories. While Palo Alto came in first overall, the city did not have a top 5 score within the individual categories; this was generally the case with all of top 20 Best Places to Live. To see the cities with the highest scores within each individual category look to the chart found here.

Exhibit 1: LivScore

Exhibit 1 presents the top 100 cities with the highest Livability scores. The cities are demarcated by colour according to their Livability score with the darker the shade indicating a higher score. By clicking an individual city, the score for that city across each of the categories is displayed. As the map displays, the top 100 Best Cities to Live are fairly evenly spread out across the different U.S. states. California was found to be the state with the most cities within the top 100, with 26 cities. This is much larger than the next two states with the second (Florida with 7 cities) and third (Washington with 6 cities) highest number of cities within the top 100. What is also interesting about the results found from California, is that while cities in other states that are presented on the map are generally dispersed throughout the state, in California there are two main clusters in which a large number of cities that are within the top 100 are located. The two clusters of dots surround the Los Angeles and San Francisco metros, as many cities have developed quite successfully around some of the U.S.’s largest cities.

The Martin Prosperity Institute is constantly examining the livability of cities and regions across many different attributes and indicators. Working with, we created the 2014 Top 100 Best Places to Live in order to provide the general public with an extensive view of livability within small and medium-sized cities in the U.S. While the study provides a ranking of all of the cities, it also provides scores across all of the indicators as we realize that livability means different things to different people. The place we choose to call home is an important decision and it can influence and be influenced by many differing factors making the availability of such data all the more important.

Download this Insight (PDF)

The Martin Prosperity Institute at the University of Toronto‘s Rotman School of Management is the world’s leading think-tank on the role of sub-national factors — location, place and city-regions — in global economic prosperity. We take an integrated view of prosperity, looking beyond economic measures to include the importance of quality of place and the development of people’s creative potential.