Re-examining Minnesota's headquarters economy

CHRIS FARRELL: Almost 15 years ago, University of Minnesota Professor Myles Shaver made some keen observations about Minnesota's unusually high number of Fortune 500 companies. And his research showed that the state's strong business landscape comes from talent in one field, attracting talent from other fields to the region. And the business landscape has changed over the years since Shaver published his research in the 2012 book called Headquarters Economy. So he's working on a brand new batch of research about Minnesota's economy and why big business thrives here.

Myles Shaver joins me to talk about it. And welcome, Professor Shaver.

MYLES SHAVER: Oh, thank you, Chris. Great to be with you.

CHRIS FARRELL: All right, so take me back to that research where-- published in 2012. And you looked at why Minnesota is the headquarters home for so many big businesses. And what was the surprising finding that really sticks out to you?

MYLES SHAVER: Yeah, well, the surprising finding is, what really differentiates our region from a lot of the major metros around the country is this notion of talent. And one of the striking things-- and you alluded to it. It really drives our economy. This is really a magnet for talent. People show up because there's jobs. But if you look at especially how high-educated, high-earning people move in and out of the region, it looks different than every other metro in the country. It's hard to get people to move here. But once they're here, they never leave. And when they never leave, they take their talent, and they move it across companies.

CHRIS FARRELL: So I've heard that. And when I moved here, it turned out to be true. It's not easy, necessarily, to be convinced to come here. But, boy, once you're here, after a period of time-- so you have this talent. You had this talent pool. But still, a large number of headquarters are here. So is this just happenstance, circumstance, or was there something else at work?

MYLES SHAVER: No. Well, really, the key thing is, one of the things that distinguishes the region is-- headquarters, in many ways, if you look at major companies in the United States today, it's not the same list of 25 years ago. So the way a region keeps headquarters is both reinventing the companies that are there and growing companies really big. And so the notion of the talent-- and I really focus on, one of the key talent bases in this region is professional management. Companies don't grow themselves. They don't start themselves. They don't reinvent themselves.

And once they're in the region, one of the really interesting things, too, unlike a lot of other regions, people, when they look for a new job, they'll jump across industries. So when I lived in New York, people who worked in banking, they'd switch jobs all the time, but they'd stay in banking, or the same in media. Here, my former MBA students, they'll be at Medtronic. And then they'll be at General Mills. And then they'll be at 3M. And this movement, they take with them insights and management practices from different industries. And it cross-pollinates. And we have a really deep pool of sophisticated managers who are managing all the companies in the region really well.

CHRIS FARRELL: So this is the white collar workforce that's a real strength here.

MYLES SHAVER: Absolutely.

CHRIS FARRELL: So if you think about the past 15 years, a lot has changed. We've been through 2008 crisis. We've been through COVID. Now we're going through an era of tariffs. I mean, there's all kinds of things that have happened. So how do you see the business landscape changed over the past 15 years, with this focus on headquarter companies?

MYLES SHAVER: Yeah. And so as you allude to, we've been through a lot of things. And I get a lot of questions. Is the same dynamic or the same things that I highlighted in the book, do they still exist today? And that's really the reason to go and do the research now, because I think it is an open question in some ways. To some of the examples you gave, we have much more remote work. And so, if people don't have to live close to where they work, well, then there's a question of, well, if you can get talent anywhere, is this really an advantage for the Twin Cities anymore. And the same type of thing is, as you've mentioned, there have been changes in the business environment and other things regionally.

And one of the key insights is, well, quality of life in the region, that's what really kept people here. And if they're focusing on different things, or maybe if we're not performing as well as you did before, we have to question if this positive dynamic will keep on happening.

CHRIS FARRELL: So as you talk to people, I mean, what are you hearing from the managers that you're interviewing?

MYLES SHAVER: Yeah, so I think one of the things that I'm hearing is, quite frankly, a lot of different things. And so some people aren't sure if remote work is both here to stay or how it affects it. I've heard some people say that, well, I don't think the environment here in the Twin Cities is as friendly to business and, as a result, business professionals as it was before. And almost every time I hear one of those anecdotes, if I talk to enough people, I'll hear just the opposite. So exactly the need to go, and let's get really good data. And let's find out, calibrate where we are.

CHRIS FARRELL: So one thing I'm curious about-- I read this report. It was a couple of months ago from two economists at Minnesota's DEED, Department of Employment and Economic Development. I always have to hesitate there when you remember what DEED stands for. And they were arguing, because of this white collar workforce that you're talking about, this talent, that this region might be able to take advantage of artificial intelligence, AI, better than some other regions. Are you getting a sense of that, or is that something you're exploring?

MYLES SHAVER: That is something that I'm not directly exploring. But talking to that, I think, again, going back, in my mind, what is really one of the key strengths of the region is we know we have people who how to run and manage companies. So saying that there's AI, you don't necessarily-- it's not necessarily important that we be on the leading edge of the technical developments. But I think the region will be in the leading edge of how do we apply it to run businesses and run them really well.

CHRIS FARRELL: So one thing I was curious about, because you've talked about talent and this white collar workforce and education. And how do we adapt AI? How do we use it within our businesses, such as Best Buy? When I talked to them, they're doing a lot in the stuff that we don't see, the back office. But when you talk about business to a lot of people, they'll talk about taxes. They'll talk about regulation. As you mentioned, you get different stories. But how do you look at things like the taxes and the regulations in this overall assessment?

MYLES SHAVER: Yeah, no, so as you allude to, it's one of the interesting things. And it led to some of the research is, when I talk to people in lots of other places, and I explain how we have this depth of a headquarters, their immediate response is, well, it's obvious why it happens. You guys must have super-low taxes or really business-favorable regulation. And most of the ratings, the state, that's just not the explanation here. So it has to be something else.

And so, of course, those are concerns. But this as the notion of the region is, are we taking the tax revenues that we get, because people are being taxed, and are we investing in things that helps grow the talent base and actually increases the quality of life? So this workforce is sophisticated. If I know that I'm paying a fair number of taxes, but I'm getting important things for it, well, that's an investment or a tradeoff I'm willing to make.

CHRIS FARRELL: So this may be an unfair question. But in doing your new research, anything surprise you?

MYLES SHAVER: No, because I haven't looked at the data yet, because we're still in the process of doing that.

CHRIS FARRELL: You're still in the process of gathering? OK. Well, thank you very much for your time. I really appreciate it.

MYLES SHAVER: It was great to be on. Thank you, Chris.

CHRIS FARRELL: Myles Shaver is a professor at Minnesota Carlson, formerly known as the University of Minnesota's Carlson School of Management.