UW System President Katharine Lyall addresses the opening of the Wisconsin Economic Summit

Wisconsin Economic Summit Begins; Statewide Audience Exceeds 850

The Wisconsin Economic Summit began November 29 at the Midwest Express Center in Milwaukee. More than 850 registered participants from throughout the state were on hand for a full afternoon of sessions.

Regent President Jay Smith and UW System President Katharine Lyall, summit co-chairs, opened the meeting with a welcome, a "charge," and an overview of the key issues.

Wisconsin's economic future, said Smith, depends on the collaboration of business, education, government, and communities. He described the summit as "an unprecedented undertaking" that will make an "historic imprint on Wisconsin's economic vitality and success."

"Most summits take place during a crisis," added Lyall. "We do not have a crisis in Wisconsin," where its economy is concerned, "but we do have an opportunity to build upon past growth now, when times are good and a strategy for transition to the `New Wisconsin Economy' can be thoughtfully worked out."

Governor Tommy G, Thompson gave a major address on the opening night

The rest of the afternoon was devoted to hearing the results of the regional listening sessions held throughout the state during September, October and November. More than 1,000 people attended these sessions and made a significant contribution to the work of the summit.

Tom Still, associate editor of the Wisconsin State Journal, served as moderator for the 11-member, regional reports panel session. Recurring themes, noted Still, included:

• perceptions of an urban/rural economic split in the state,
• the growing importance (and lack of) venture capital,
• the need to reward economic risk-taking,
• perceptions that the state's educational system is strong,
• the importance of maintaining a strong energy supply,
• the need to retain and attract high-skill workers,
• calls for strengthening the road/rail/air transportation infrastructure,
• concerns about taxes and government regulation, and
• perceptions that the state's health care system is strong.

A question and answer period followed the regional reports. One person noted that it's possible to infuse traditional industries with new technology, rather than having to start up entire new high-tech industries. In other words, you can be a part of the "old" economy" and the "new economy" at the same time.

Richard Harris of Wautoma (right) asks a question during the regional reports session.

All five regional reports are now available on-line as "white papers" and PowerPoint presentations at www.wisconsin.edu/summit/

The next session, entitled "Connecting the Dots: Regional Opportunities, State and National Policy," featured UW-Madison faculty members Don Kettl and Don Nichols.

Kettl, chair of the Wisconsin Blue Ribbon Commission on State/Local Partnerships, said "Wisconsin is not just an economy, but a collection of regional economies." He compared the state to a corporation, which is only as successful as its subsidiaries. Competition among regions and communities becomes a barrier to the state's ability to grow. "Government needs to be a part of this conversation," said Kettl, through tax policy, regulation and infrastructure improvements, so that a collaborative investment strategy for the whole state can be created.

Nichols offered a national perspective on the discussion, focusing on the lessons we can learn from Silicon Valley. "It's not all about building the Internet," he said. "It is about the clustering of expertise, which is a mode of operation applicable to many industries." In such clusters, he observed, entrepreneurs meet up with venture capitalists, can easily outsource for products and services, and can trade capital for ideas. "This mode of behavior can exist in the metal industries of Milwaukee," he said, "not just on the Internet."

What are the features of the "new economy," asked Nichols? In addition to the clustering of expertise, it involves close ties with universities. He wants Milwaukee to have an ambitious vision, one that would attract high-tech college graduates. For example, Milwaukee could define itself as a world center for engineering, he said, much as Detroit has supplemented its assembly lines with research labs.

A lively "town hall"-style discussion followed. Several panelists cited existing examples of clustering in Wisconsin, including the University Research Park in Madison, the Fox Valley paper industry, and institutions of higher education.

A highlight of the first day of the Wisconsin Economic Summit was a major address by Governor Tommy Thompson. In his remarks, he challenged the audience to come away from the three-day meeting with an action plan for shaping the future of Wisconsin's economy.

"Instead of using the summit for a conversation about what we should be doing, we must ask how we will do it," said Thompson. "We must come together and work together to build the jobs we want for our children and grandchildren."

Thompson reviewed his successful action plan for the Wisconsin economy that brought the state from a recession in the mid-1980s (when the state lost 134,000 jobs and average unemployment across the state was 8.7 percent) to today's era of state prosperity.

Today, said Thompson, state unemployment is among the lowest in the nation, at three percent, and personal income is growing at close to five percent per year. More than 700,000 jobs have been created since 1986, he said.

Thompson lauded the summit and its goals, but said the discussion of Wisconsin's economic future is not a new one: "we have been actively building it for a long time."

One key to success has been partnerships, said Thompson, and he noted that the Chippewa Valley's developing high tech industry is one example of how success can be achieved. It has been based on strong partnership between educational institutions, community and state and now it is one of the state's most robust regions, he said.

Among the building blocks he pointed to has been the state's major investment in education, especially in the University of Wisconsin System's biotechnology programs.

UW-Oshkosh Chancellor Richard Wells (left) speaks with Rep. Gregg Underheim of Oshkosh

"I am committed to make Wisconsin the number one leader in biotechnology," said Thompson. In that regard, he said that though the coming state budget will be tight, "we will go as far as we can to fund the second phase of the Madison Initiative and the Milwaukee Idea."

Thompson also gave the business, government and educational leaders a sneak preview of some of the elements that will be unveiled in his proposed budget early next year.

In education, he said he wants to guarantee access to the UW System for every technical college student with a B average, and expand the youth options program that allows high school juniors and seniors to take college courses. He also wants the state to continue investing in youth apprentice programs and he challenged business and labor to get more involved in these programs and support them as an avenue to keeping talented Wisconsin students in the state workforce after they graduate.

In tax reform, he called for a single tax factor to make Wisconsin even more attractive to businesses, and an aircraft hub exemption to make Wisconsin more accessible to business and recreational travelers, and development zones to encourage clusters of new high-tech businesses.

Thompson said one threat to Wisconsin's prosperity is the state's fragile energy supply and he called for more generation, more conservation, and more transmission capacity while protecting the environment and respecting the rights of landowners.

Thompson also said that he would ask the State Investment Board to invest another $50 million in venture capital, and would host a venture capital summit early in 2001. He would also like to see state employees given the option of investing in venture capital as an option in their retirement programs.

Finally, he called on Madison and Milwaukee leaders to work together to strengthen the state's economy, noting that both areas have strengths that complement each other.

Thompson noted that he eagerly awaits the ideas and plans from the summit so that he can build them into his budget. "Building this economy will require all of us to step up to the plate."

Summit organizers acknowledged Thompson's contribution to the state's strong economy with a special resolution, signed by conference co-chairs Regent President Jay L. Smith and UW System President Katharine Lyall.

Lieutenant Governor Scott McCallum greets the Summit

Second Day of Wisconsin Economic Summit Focuses on Concurrent Sessions, Workshop on a State `Brand'

The second day of the Wisconsin Economic Summit featured a wide variety of presentations and panel sessions that broke down the seven summit themes into manageable segments. The discussions were lively and the viewpoints varied as the more than 850 participants engaged the key issues that affect Wisconsin's economy.

As the first general session speaker on Thursday, Lieutenant Governor Scott McCallum picked up where Governor Tommy Thompson left off on the first day. "The best in this state is yet to come," he said. "We have the capital assets and we have the people."

Christopher Lochhead of Scient Corporation gives a very energetic presentation

He stressed the need to recognize the role Milwaukee must play in the future of Wisconsin. It's a big city, he noted, with an educated workforce, and is among the nation's leaders in college students per capita. "Our commitment ought to be to have the best education system in the world," he said. Events such as the Economic Summit are "helping people understand that change is going to occur" in Wisconsin, and that we should welcome it.

Christopher Lochhead, chief marketing officer for Scient Corporation, came to Milwaukee as a late substitute for Bob Howe, Scient's chairman and CEO. Lochhead offered a stimulating (and often entertaining) analysis of the end of the "New Economy" and the start of what he termed the "Next Economy."

Panelist Brenda Blanchard - Secretary, Department of Commerce - State of Wisconsin

"The Internet is not a business model," he said, "it's a technology, a transforming agent for creating new business models." He went on to say that there is "No such thing as a Wisconsin market. Every single company in the world is becoming glo-cal - global and local at the same time." He encouraged the audience to welcome risk-taking, saying that "If it's worth doing, it's worth doing wrong fast."

Tom Still returned as moderator of a panel discussion on "Wisconsin's Economic Challenges, Potential and Opportunities." The five presenters, including Brenda Blanchard, secretary of the Wisconsin Department of Commerce, discussed specific strategies for enhancing Wisconsin's future economic vitality.

"Wisconsin's economy is clearly strong and growing," said Blanchard, "with a rate of business creation second only to West Virginia." Unfortunately Wisconsin loses too many graduates to other states, she said. She identified 10 areas that loom as critical factors for the state's industrial growth, including the availability of start-up capital and the availability of skilled labor.

Up to this point, all summit sessions had been for the whole group. Six concurrent sessions followed, with a break for lunch, that gave participants an opportunity to choose between two topics. Here are examples of the wide range of comments made during these concurrent sessions:

Todd Berry, Wisconsin Taxpayers Alliance

He focused on taxation in Wisconsin as a barrier to economic progress, noting that the state income tax is substantially above the national average. This requires employers to raise salaries in order to make up for the income tax burden on employees. The result is lower wages for less-skilled positions.

Panelist Richard Gartner, Special Assistant to the Governor for Building Tomorrow's Workforce

Cate Zeuske, Wisconsin Department of Revenue
The issue is not less regulation, but different kinds. Government is looked to as a safety net, moving deliberately but slowly in such areas as cyberlaw, privacy and security, and digital signatures. "Our tax law is based on industrial age laws," she said, some of which are negative and some inapplicable to the new economy. There is a need to work collaboratively with other states to simplify the state sales tax, which accounts for one-third of Wisconsin's revenue.

Michael Butera, Wisconsin Education Association Council
There is a shortage of teachers in Wisconsin because teaching is not seen as a "good" job. There are also no advancement opportunities: "You `advance' by leaving." UW-Milwaukee's Nancy Zimpher added that it's difficult to persuade teachers to consider positions that are urban or rural. "We need to expand our cultural understanding," she said.

Ed Chin, Wisconsin Technical College System
WTCS campuses serve 440,000 students each year, 75% of them over age 24. "We try to be fast, friendly and flexible," he said, "at low cost and in ways that are efficient and effective." (When the room lights went out and no one could bring them back up, he quipped: "This is a demonstration of the need for more technical workers!")

UW-Milwaukee Chancellor Nancy Zimpher addresses workforce education

David Newby, Wisconsin AFL-CIO
He cautioned against dismissing the "old economy" in favor of high-tech jobs that may not materialize for a long time. He urged the audience to focus on improving the standard of living in Wisconsin, encouraged support for K-12 and technical college education, and suggested the best investments were in transportation and communications infrastructure.

Aaron Olver, McKinsey and Company
The high-tech sector grew five times as fast as the rest of the economy in the 1990s. "Universities act as cultural magnets and catalysts for diversity," he said. "Innovative start-up companies are incredibly seductive to young high-tech workers" who "vote with their feet." The UW System has one of the best technology transfer programs in the country.

John Byrnes, Mason Wells
Venture capital is much more available now in Wisconsin than it was a few years ago, but there are many obstacles to starting a company. "There are very few unmet needs in America," he said, and coming up with an idea that is better, faster and cheaper (by at least 50%) is not easy. Entrepreneurs need energy, creativity and passion, and most of them are "younger than the people in the room today!"

Luncheon in progress

Laura Francis, Hypercosm
She left Silicon Valley for Wisconsin, even though friends told her she was crazy, because she loves the quality of life in Madison. She talked to "everyone" when raising $3 million from "angel" investors, noting that venture capital funds are still very small in Wisconsin so can't commit enough money to a single project. This search for funds leads start-up companies elsewhere - away from Wisconsin. She noted that the UW-Madison alumni network is extraordinarily strong and helpful to entrepreneurs.

Gary Wolter, Madison Gas and Electric
"As an economy evolves," he said, "the need for reliable energy is increasing." Wisconsin has an aging fleet of power plants. All new plants being planned now will use natural gas, the price of which is very volatile. We need clean coal options and incentives for communities to welcome the new power plants. MG&E is committed to Green technology, such as wind power.

UW-Milwaukee Assistant Chancellor for Student and Multicultural Affairs Stanley Battle

Jim Haney, Wisconsin Manufacturers and Commerce
He felt that Katharine Lyall's comment about Wisconsin not being in an economic crisis was "right on the money." He added that, "If it's action we're looking for, immediately reforming the tax and regulatory climate is a good place to start."

The luncheon speaker was Arthur Rolnick, senior vice president and director of research for the Federal Reserve Bank of Minneapolis. He challenged the audience to differentiate between "good" and "bad" interstate competition for economic development. Using lavish tax incentives to persuade a company to move from Minneapolis to St. Paul, for example, is counterproductive for the state of Minnesota, inequitable, and may not be good for the company or its employees in the long run.

When cities or states compete to have the best schools, the lowest crime rate and the best public services, said Rolnick, there's a high rate of return for everyone. "Make sure you've educated your kids," he said, before engaging in economic bidding wars.

After the last concurrent session of the day, Marsha Lindsay led the group in a workshop-style presentation about "The Brand Called Wisconsin: Can We Make It Relevant and Differentiated for Competitive Advantage."

Marsha Lindsay, President & CEO of Lindsay, Stone & Briggs, speaking about the Wisconsin "Brand"

"A brand is more than a slogan or an ad campaign," she said. Brands have functional, emotional and social benefits, as well as economic value. At present, Wisconsin's "brand" is too vague and not altogether positive. She urged the creation of a panel to explore the possibility of establishing a new, strong, bold image for the state, one that could be used in tourism, product marketing and community development. Implementation of such a brand will take time and money, she said, but the benefits would outweigh the costs.

"Wisconsin will have to brand," said Lindsay. "We don't have a choice." She said the greatest cost would come from failing to brand. "It's worth the investment."

The well-received session on branding was followed by a recognition reception for the authors of the 41 Economic Summit white papers, all of which are available on-line at www.wisconsin.edu/summit/papers

Milwaukee's Midwest Express Center is the site of the Wiscosin Economic Summit

The first-ever Wisconsin Economic Summit concluded on Friday, December 1 on an upbeat and forward-looking note. The final morning included words of advice and encouragement from a corporate giant with Wisconsin roots, plus a rare joint appearance by the four leaders of the state legislature. A wrap-up session offered an overview of the three-day event, after which the co-chairs announced some of the next steps planned by the University of Wisconsin System.

Milwaukee Mayor John Norquist extended a formal welcome on Friday. In brief remarks, he predicted that revitalized cities -- including Milwaukee -- will play a major role in shaping the "New Economy." He pointed to a survey released on Thursday that cited Milwaukee/Racine as the U.S. metropolitan area with the fifth highest "IT IQ." He said he was impressed by the information coming out of the summit, and pledged to do everything possible to implement recommendations, in cooperation with the UW System, UW-Milwaukee, and the city's independent colleges.

Friday's featured keynote speaker was John Morgridge, chairman of Cisco Systems

John Morgridge, chairman of Cisco Systems, was the featured keynote speaker on Friday. Cisco, headquartered in San Jose, is a global leader in networking for the Internet and is among the world's largest companies, measured by market capitalization. Morgridge, who grew up in Wauwatosa and graduated from UW-Madison, became president and chief executive officer of Cisco in 1988, when it was a privately held company with 34 employees and just $5 million in sales.

"The sine wave of change is changing," said Morgridge, "and the leaders are those who can adjust quickly to the change and embrace it." Historically, he said, someone created new value over time. The competitive advantage diminished as the invention became commonplace, but there was a lot of time in which to change and maintain the advantage. Now, he said, you have to anticipate more because of the compressed time factor. "It's not size that dictates success," he said, "but how quickly you move." The future of the Internet, he said, is "all about speed, talent, brand and culture."

He cited a study of the entrepreneurial culture in California's Silicon Valley. Six elements stood out as important: talent, pillar companies, government, investors, support services, and universities. Wisconsin has a great biotechnology investment underway in Madison, said Morgridge. It's important that this effort be followed up and built upon. For that to happen, he said, "you start with leadership, and this kind of meeting is that kind of leadership."

Unlike the Industrial Revolution, said Morgridge, "this is not a revolution of mass and capital. Speed and knowledge make the difference. Are you ready?"

Next, a legislative perspective on economic issues was provided by the four principal leaders of the Senate and Assembly: Sen. Chuck Chvala, Sen. Mary Panzer, Rep. Scott Jensen and Rep. Shirley Krug.

Moderator Tom Still introduces the legislative panel (from left to right): Sen. Chuck Chvala, Sen. Mary Panzer, Rep. Scott Jensen and Rep. Shirley Krug

"We have a good future in front of us in the `Next Economy,'" said Chvala, who expressed confidence that investment "money will find good people and innovative ideas." He proposed a new program in Wisconsin, offering two years of free tuition to high school graduates with a 3.0 grade point average whose families earn $60,000 or less. He said it was wrong that the state's Corrections budget is regarded as "sacred," while the UW System budget is considered "negotiable." It should be the other way around, said Chvala.

Panzer said she was impressed with the depth and detail of the summit white papers. She predicted progress for Wisconsin in four areas: 1) reduced personal income tax rates, 2) an improved, user-friendly regulatory climate, 3) more awareness of the importance of angel/venture funds, and 4) enhanced infrastructure, e.g., roads, air travel and electrical transmission. "Staying where we are will not get us where we need to be," said Panzer, who challenged the UW System and the technical colleges to work together more closely toward common goals.

Cutting taxes must be at the top of any legislative "to-do" list, said Jensen. He pushed his proposal for a higher education tax credit for companies whose employees go back to school. He again urged Forward Wisconsin to shift its emphasis from attracting companies to attracting and retaining skilled people. He said he wants Wisconsin to be a more attractive place in which to retire, by eliminating taxes on pensions and Social Security. He also called for elimination of the state's Internet access tax (one of five such taxes in the country).

Krug also touched on the "brain drain" in Wisconsin, stating that "what we plant other states harvest" in terms of educated talent. "How well Wisconsin embraces the New Economy will be a key factor in our economic health," she said, "but not the only factor." She urged continued support for the state's existing industries, through infrastructure improvements, for example, even while Wisconsin courts New Economy companies. Toward this end, she said "we should not falter in our support of K-12 schools and the UW System."

Sen. Alberta Darling and Rep. Peter Bock fielded audience comments. During questioning the legislative leaders sparred with each other over philosophical differences, but pledged to cooperate more closely in the future. After two difficult budget sessions in 1997 and 1999 said Chvala, "we're going to try to make the legislature work. We have to."

David J. Ward, president of NorthStar Economics (left), and Don Nichols, professor of economics at UW-Madison (right), provide a wrap-up of the Summit

David J. Ward, president of NorthStar Economics and a former UW System official, and Don Nichols, a professor of economics at UW-Madison, took the stage after the legislative leaders to draw some conclusions about the summit. According to Nichols, the summit "clearly touched a chord" with people who are concerned about the future of Wisconsin's economy, people who might not have met each other if not for the summit and its regional listening sessions. He was pleased that the "participation of the university has been welcomed," and noted that the UW System is in a good position to frame many of the issues."

Ward focused on "the bottom line," i.e., the need to increase the average income level of Wisconsin workers. He spoke of the collection of white papers as a "preliminary road map" for the state, and then went on to identify some areas of consensus:

1. Educating the Workforce: How can we get a more seamless educational system, and how do we get more college graduates to stay in or move to Wisconsin?
2. Venture Capital: Wisconsin ranks very low, with $14 per capita vs. $71 nationally. There is a need for more seed capital and angel networking.
3. Improving Technology Transfer: Research is being done at places other than UW-Madison (e.g., Marshfield, La Crosse) that is potentially beneficial but needs to be shared.
4. Changing the Culture: We don't "celebrate success" in Wisconsin. We fear leaving someone behind, so we don't move ahead. Yet, if we don't move ahead, we'll leave everyone behind.
5. Globalization: We need workers with international exposure and experience.
6. Entrepreneurial Climate: We need to make it easier to start a new business.
7. Branding: We need to change the image of the state from one of beer, brats and cheese to one of clear air, clean water and a prosperous economy. It could be a decade-long project.

Nichols focused on infrastructure issues, noting that the shortage of electrical power was "almost an emergency" and had dominated several summit sessions. "Lights Out Wisconsin" is not a brand we want, said Nichols. It would bring an end to New Economy development and harm the old economy as well.

The final session featured UW System President Katharine Lyall and Regent President Jay Smith talking about the next steps for advancing the work of the summit.

"It was gratifying to see so many from all over the state," said Lyall, "all here together and engaged to a surprising degree in this discussion about the future of the state's economy." One outcome of the summit, she said, "must be to keep the conversation going." Toward that end, she committed the UW System to "staying engaged" with its partners in the area of economic development. This is important because "the future of the state and the future of our students are one and the same" and "the future of the state's economy is the future of the university system."

A formal report on the summit, summarizing the findings and containing action items, will be submitted in mid-December to the governor and leaders of the legislature, said Lyall. The summit website will remain on-line, and a CD-ROM version of the white papers, final report and other materials will be distributed by February 1 to participants and the public. A year from now, the UW System will convene a follow-up meeting to assess the progress of the recommendations coming out of the summit.

"Finally," she said, "our university campuses and statewide extension will continue to serve as catalysts for regional discussion of economic development, and as partners in the implementation of the many good ideas we have heard here at the summit."

Regent President Jay Smith brings the Summit to a close

Smith brought the summit to a close by saying it had met the expectations he identified during the opening session on Wednesday. "The summit has resulted in the creation of a significant body of new knowledge in the seven key areas we outlined," said Smith. "This knowledge will lead to recommendations for further study, policy development, and specific action."

The summit also created new synergies and partnerships involving business, labor, education and government. "Now we need to keep those partnerships going," he said. "We've seen the start of a serious commitment to work together to create a set of realistic goals and a roadmap for Wisconsin's long-term vitality and success." He urged participants to take personal ownership of the goal of making a better future for the state.

Smith then announced some of the action items that the UW System will undertake:

• "We will move ahead to form a voluntary, statewide `PK-16 Council' in partnership with the Department of Public Instruction, the technical college system, and the organizations that have a stake in a seamless higher education system." This proposed council will be discussed at the Board of Regents meeting December 7-8.
• "We will commit to increasing the percentage of college graduates in this state through improved graduation rates for our campuses."
• "Through the use of our alumni networks, we're going to bring our graduates back home to Wisconsin. We're going to get very active in that sector."
• "We will commit the UW System to developing a strategy [by February 1] for bringing more federal dollars home to our campuses," in cooperation with the UW System institutions and the Wisconsin congressional delegation.
• The UW System will bolster technology transfer in a variety of ways: expansion of Small Business Development Centers, enhanced visibility for the new WiSYS patent and licensing structure, and support for a joint UW-Madison/UW-Milwaukee business incubator.
• Other action items, related to such issues as venture capital, energy, infrastructure, taxation, branding, and regulation, will also be addressed in the report to the governor.

"It will take all of us working together to address these issues," said Smith in closing. "With the energy, wisdom and concern that I've seen here at this summit over the last few days, I'm confident that we can get this done. And we will."