Why do so many Fortune 500 companies call Minnesota home?
Lynn Garthwaite of Bloomington has long thought it "brag-worthy" that our state had so many big companies based here.
As of last count, Minnesota had 17 on Fortune's ranking of 500 largest companies. And all but one is located in the Twin Cities, just the 16th largest metro area in the country. By including Medtronic Plc. of Fridley, formally registered in Ireland and thus not on Fortune's famous ranking, we get to 18 big headquarters.
While she had her own theories, Garthwaite wanted an informed answer on what "attracted" these companies to our region. She reached out to Curious Minnesota, our community-driven reporting series fueled by questions from readers.
The answer, though, is that nothing attracted them. There's generally not much movement in the Fortune 500, but if they do move, they sure don't move here.
Instead our region has more than its fair share of very big companies that got started here with next to nothing -- in a northeast Minneapolis garage (Medtronic), a Roseau metalworking job shop (Polaris Industries) and a 1,200 square-foot stereo components store on Hamline Avenue in St. Paul (Best Buy Co.)
So, the real question is how our region came to have so many little companies that managed to survive adolescence and mature into really big ones.
That question has even baffled experts, like Myles Shaver when he first came to the region in 2001.
Shaver is a professor of corporate strategy at the University of Minnesota's Carlson School of Management. He's often asked by colleagues at other universities how he could have chosen the Twin Cities.
One answer is that he and his wife knew it had a lot of big companies, making for a great place for her to continue her career. But even he hadn't realized just how many, and once here he kept hearing about even more.
To him, it simply made no sense.
The Twin Cities doesn't have any of the things other big headquarters towns seem to have. There's not one thriving industry here providing most of the horsepower for the economy, like automobiles once did in greater Detroit or computer technology has for Silicon Valley. We have agriculture and natural resources, but no more than lots of other places.
Shaver guessed that he thought off and on about it "10 or 12 years" before settling on an explanation he could look to confirm through research. We have more than our share of big companies here, he finally decided, because we have more than our share of people who know how to help companies grow.
When talking about the impact of skilled workers it's easy to think about specialized jobs, like "food scientist" at General Mills or "medical device engineer" at Medtronic, but Shaver is talking about managers, and their skills for leading or directing people and processes.
He is not talking about CEOs, either, but down in an organization where products and services are developed and marketed, technology upgrades are planned and rolled out, workers are trained and so on.
He confirmed in his research what's long been said about the region, that our cold winter weather means it's hard to get somebody to move here. But once here they never seem to leave. The important thing in his explanation is that within the Twin Cities the talented people move around.
Someone might start in the finance department at 3M Co. out of business school, learn a lot more at a new job managing a team at U.S. Bancorp and then get recruited to take over a department at UnitedHealth Group.
So that's one management career at three thriving companies in three different industries, each stop an opportunity to learn new skills as well as bring some smart practices learned at the previous job. When this happens, hundreds of times, all these companies tend to grow and get stronger.
In researching his 2018 book about the Twin Cities economic phenomenon, "Headquarters Economy: Managers, Mobility and Migration," Shaver surveyed management employees at 23 big employers, including at what he called hidden headquarters, the big, locally based operations that have a parent company based out of state.
Among other things, he was looking for reasons why corporate managers chose to stay in the Twin Cities rather than explore job options elsewhere. He found that the quality of life here matters a lot.
Managers with kids in the house picked the Twin Cities as a good place to raise kids, ranking that ahead of the availability of good jobs. That was followed by good public schools, a strong and diverse local economy and a lot of outdoor recreation opportunities.
Shaver gently disputes that luck had much to do with the origins of our headquarters economy, like having a fine waterfall in Minneapolis that could power the once-booming grain milling business or how a group of groundbreaking computer engineers could land in St. Paul after World War II almost by chance.
"In a lot of the stories about why certain things start, there is often a lot of serendipity," he said. "But then the people stay, and they help drive the re-creation."
It is true that Golden Valley-based General Mills, number 200 on the Fortune 500, came out of the region's celebrated flour-milling past. But it's been 103 years since that industry peaked here. Without a lot of savvy managers staying put in the Twin Cities since then to reinvent General Mills, it wouldn't still be here.
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