Ramstad: Professor revisits what’s driving Minnesota’s ‘headquarters economy’

When Minnesotans talk about the state to people outside it, two things usually come up first: We’ve got a lot of lakes and a lot of big-name companies.

University of Minnesota professor Myles Shaver doesn’t have a lot to say about lakes, but his book “Headquarters Economy: Managers, Mobility & Migration” explained why Minnesota had an unusually large number of Fortune 500 companies. Nearly a decade has passed since the book gave Minnesotans a new way to look at themselves, though, and it’s not clear if the lessons still remain relevant.

So it’s time for an update. Shaver in 2012 surveyed more than 3,000 managers working in the state’s large companies, and the data reinforced his breakthrough insight. Business clusters can form not just around an industry — as happened in Detroit with autos and Silicon Valley with technology — but around talent itself.

His research into Minnesota’s big businesses showed how a labor pool becomes its own reinforcing mechanism for a region. Talented people attract more talented people who will move across industries.

The source of Minnesota’s success nagged at Shaver in part because friends on the East Coast wondered why he moved here in the first place, back in 2001, and in part because the conventional explanations for economic vibrancy didn’t seem to apply.

“Nobody had what I would have said was a believable answer,” Shaver told me earlier this month. “It’s not one industry that drives things. It’s not public policy, like super low taxes. It’s not that we’re just riding a demographic wave.”

Instead, he found that people in Minnesota companies were unusually willing to consider switching industries in order to stay in the region. In short, the quality of life here is incredibly appealing.

Now, the Minnesota Business Partnership, the group of CEOs of large companies, is helping pay for Shaver to update his research.

Shaver this summer sent out the same survey to the middle and senior managers working in Minnesota’s big companies — with a few additional questions. He aims to publish the results this fall.

“People will argue there’s different perceptions of business in general in this state than there were 10, 12 years ago,” Shaver said. “We know those have changed. The question is, ‘Have the underlying perceptions of the talent that really drive the headquarters economy changed?’”

The survey, he added, “is largely a carbon copy that will give us the best way to calibrate the responses with what happened in the past, with the addition of a few questions about things that we weren’t thinking about as much 10 years ago, such as remote work.”

Since Shaver’s last survey, the pandemic reduced how often people work in a central office. Many Minnesota employers, no matter their size, allowed some workers to move away from the state. As well, the state’s population growth leveled off and its culture became more diverse.

There were 20 in 2013 when Shaver’s original research came out, 17 in 2015 when his book published and 17 today, as measured by the Fortune 500 list, which ranks companies by revenue.

The Business Partnership is starting a marketing campaign around the power of having so many corporate headquarters in the state and metro area. One product of that was an event earlier this month where nearly 30 Minnesota CEOs participated in a long-distance ringing of the opening bell of the New York Stock Exchange.

In speeches there, CEOs noted that many other Minnesotans contribute to the state’s attractiveness. Corie Barry, CEO of Best Buy, talked about the region’s theaters and museums. Geoff Martha, CEO of Medtronic, congratulated Bûcheron, the Minneapolis restaurant cited as the nation’s best new restaurant in the James Beard Awards last month.

“We’re all part of a cycle that fuels Minnesota’s competitiveness,” Martha said. “Invest in people. Build strong businesses. Attract more people. Reinvest in community. That cycle doesn’t happen by chance. It takes intentionality. It takes strategy. More importantly, it takes commitment.”

I’ve written in the past about my fear of a diminishing connection between Minnesota’s business leadership and its communities. Other colleagues here at the Star Tribune and elsewhere in Twin Cities media have, too. So it’s encouraging to see CEOs recognize that the power of Minnesota’s headquarters economy is shaped by what’s beyond their doors as well as what’s inside them.