A couple of months ago the Itasca Project, a consortium of Twin Cities-area executives and elected officials, hired a regional economic development czar to spearhead a 13-county approach to attracting and retaining companies and jobs.
Chasing businesses can be a high-profile, high-cost endeavor as cities and states nationally pitch with tax breaks and other incentives. The regional approach to economic development is designed to at least cut out some of the intramural competition with public dollars.
This week, the next phase of the Itasca Project's jobs initiative launches. Its focus: to help the small companies that are already here grow bigger.
"About 70 percent of new jobs come from small businesses," noted Michael Gorman, the venture capitalist and Itasca Project leader. "And this will be an effort by our world-class, leading Minnesota companies to connect with some of those emerging companies that have a proven ability to meet their needs."
On Tuesday at Medtronic, one of the Twin Cities' 20 Fortune 500 companies, 10 small information technology companies will be "showcased" before representatives of those companies and large private companies, including Cargill and Carlson, in the inaugural effort to build a "business bridge."
The Itasca study found a recurrent theme: Small local companies have trouble getting in the door at big companies. Procurement officials at big companies may not look first in the neighborhood and often have difficulty sorting through potential suppliers to finding the best ones who can meet their requirements.
Over the last several months, about 80 smaller IT companies were nominated by large-company procurement executives and others. There was a vetting process to ensure they could deliver as promised. In addition to the 10 to be showcased on Tuesday, several dozen other finalists will go into an online "supplier referral library" that, if the pilot program gets traction, will be expanded to other categories of small vendors.
Allison Barmann, a McKinsey & Co. consultant who staffs the Itasca Project, said, "We want to develop a portal, kind of an Angie's List of preferred vendors."
The stakes could be big, she noted. Minnesota companies with 500 employees or more spend about $86 billion annually on everything from paper clips to food to technology. A redeployment of just 1 percent of that spending to local companies would amount to nearly $900 million.
"On behalf of the large companies, we see this as an exciting initiative," said Chris O'Connell, a Medtronic executive vice president and Itasca Project member. "Our supply chains are not necessarily optimized to local companies."
CEO Mark Gorder of Arden Hills-based IntriCon is proof that a big-company relationship can be critical.
Gorder met O'Connell several years ago at a medical device manufacturers' show in California.
Among other things, IntriCon designs, manufactures and "miniaturizes" medical devices worn on the body.
Medtronic's diabetes division, then headed by O'Connell, was looking for a manufacturer to make a tiny glucose-sensor that would transmit glucose readings from the patient to a Medtronic insulin pump.
"Medtronic has been a great partner," said Gorder, adding that the relationship led to more business with Medtronic, other companies and growth. "We formed a joint working team, and they sent engineers out here for several months to work elbow-to-elbow with us. We couldn't have done it without their financing and expertise.''
The expertise and added capacity gave IntriCon the means to make a recent acquisition of a company that makes cardiac diagnostic monitors. IntriCon is retooling the monitors through miniaturization while also increasing their performance.
"Medtronic made us a better company," Gorder said.
The Itasca Project sponsors figure that if good things can happen from a chance meeting at a California conference attended by a couple of Minnesota firms, much more could happen through a formal referral network targeted at smaller Minnesota suppliers.
The list of Minnesota IT companies showcasing their capabilities for more than 100 large company technology officers includes Code 42 Software, which created the "CrashPlan" backup software, and Packet Power, which offers hardware, software and services to monitor and reduce data center power usage.
More information can be found at: www.theitascaproject.com.
Neal St. Anthony • 612-673-7144 • email@example.com