When Sheri Teodoru looked for a new career opportunity, she was attracted to
CFI Group in Ann Arbor, a well-respected, growing customer satisfaction research firm. A big added attraction was the firm's linkage to the University of Michigan (U-M), her alma mater, and the opportunity to work for a former professor, Claes Fornell, one of the world's authorities in customer satisfaction and a CFI Group founder.
"I had Claus as a professor when I was a graduate student in the late '80s," says Teodoru. "I worked in Chicago for many years, but I wanted to come back home. … I was pretty picky (about career moves). When I found Claus's company, it was fantastic."
CFI Group has distinguished itself internationally through the use of the American Customer Satisfaction Index (ACSI); a unique survey tool developed by Fornell at the U-M.CFI Group spawned
ForeSee Results, an online customer service research firm also in Ann Arbor, through a joint venture with Compuware. Larry Freed, another U-M grad, was chosen to lead that company. ForeSee also uses the ACSI.
Both companies employ a large number of U-M graduates and benefit from research produced at the university. Yet despite the academic connections, which each consider a considerable asset, the firms, which have offices in several states, admit that they could establish their headquarters elsewhere.
The U-M, which is in the top 10 universities for commercialization, directly and indirectly, is responsible for creating several start-up companies each year – 83 since Ken Nisbet was appointed director of the
U-M Tech Transfer department in 2001. About 60-70 percent of them are located in the Ann Arbor area. Creating an "ecosystem" to nurture entrepreneurial development within and outside the university is a focus of his work.
While the Michigan environment is far from ideal for nurturing and retaining new businesses, particularly when it comes to venture funding, the challenge is creating a supply of management, technical, and research talent, Nisbet says. "The university is blessed with research and technical talent. Our state isn't blessed with management talent. There are some great CEOs here, but a lot of the talent exists elsewhere."
You may have to let some new companies go, if management and financial imperatives draw them away. In that case, a hybrid strategy may be the best of both worlds, Nisbet says. Citing a U-M spin-off established in Boston, "the majority of the activities of (its) employees was here in Ann Arbor, close to the research and connected to the university. That hybrid strategy is a great one because it lets us develop local resources and talent, and gain the advantages of at least a presence in Michigan, if not the headquarters. It also allows the company to maximize its growth potential by being where it needs to be. We'd rather have the whole company here, but if it comes to a hybrid strategy being better than that, let's do it."
Teodoru and Freed, who are Michigan natives, like living and working in the state, are proud of their university heritage, and value its talent pool and research connections. The cost of doing business is favorable and their businesses are growing. They feel an obligation to their companies to consider better options, but neither is eager to leave.
A few years ago, ForeSee considered establishing a second office on the West Coast. The State of Michigan offered financial incentives to help the company expand in Ann Arbor. While that worked, Freed says that when the state or region bargains with businesses strictly on a financial basis, "it's a slippery slope." There's a risk of giving up too much revenue to keep the business. At the same time, he admits there's a need to create a critical mass of new economy businesses. "Success breeds success. Talent breeds talent. The more successes we have in Ann Arbor and the State of Michigan, the better it's going to be for everybody," he says.
Though the Ann Arbor environment is central to new economy development, a regional perspective is a stronger sell, he says. To that point, the region missed an opportunity a few years ago when
Compuware established its corporate headquarters in Detroit, Pfizer maintained its research and development presence in Ann Arbor, and Grand Rapids was growing. "The challenge that we didn't take advantage of was that we have a region – Southeast Michigan, plus Ann Arbor, plus Grand Rapids…If we had put that message together, it's a compelling story," Freed says.
Freed and Teodoru say that the business and cultural environment in Ann Arbor remains competitive with Boston and the West Coast, despite their allure as "cool" locales. It's about access to talent and intellectual innovation, Freed says. "The university is a very good environment. You have great minds here and that allows you great talent. For us it's both technological talent and analytical, marketing research talent. It's been very positive from that perspective. Can you do it elsewhere? Absolutely. The lifestyle Ann Arbor provides people is a positive as well. It's a great community."
Citing the strength of the customer service research done at the university under the leadership of Fornell, Teodoru says, "We want to be close to where that talent is; where the (research) action is." Despite academic and personal connections, Teodoru admits that "we could pick up and move tomorrow. We're not looking to move tomorrow (but) if I'm doing my job, I'm out there looking to make sure that being here continues to make sense." Michigan and Ann Arbor have a lot to offer businesses – perhaps more than many would realize, she adds.
Nisbet's focus on the university's entrepreneurial ecosystem involves recruiting strong researchers and faculty to train students, share experience, and conduct research that leads to innovation and new product/business development. The U-M wants to become a "breeding ground for talent, opportunity, encouragement and motivation," he says. "We're also trying to have connections with businesses that can use the university, alumni who can help the university, talent that will come to our region and be used by us or others, (and) funding opportunities."
American Consumer Satisfaction Index, LLC is the latest spinoff of the university. Fornell and his associates made a compelling argument that the ACSI would be more successful as a commercial entity, rather than an academic institution. While one might think that the university would want to retain the prestigious ACSI, Nisbet argues that the university is a research institution, "not a commercial business," and is charged with delivering start-ups to the market.
"We're truly not in this for the money," adds Doug Hockstad, associate director of Tech Transfer, who oversaw the ACSI spinoff. "The main purpose is to maximize the potential of the discoveries and resources of the university. We've had nice little businesses within the university and took a look and said, ''I think this could prosper more outside the university because it would attract the talent and resources necessary to grow, where it can't do that within the university.'"
The university gains not only from brand awareness, but enhanced credibility as well, says Hockstad. "The university can point to start-ups and say, this is what's happening at the U-M… the kind of energy that we have," which attracts more students and faculty.
Indeed, the association with ACSI and "great talent" enhances ForeSee Results' competitive edge, Freed says. "For us, we're a new technology in an evangelizing mode…talking to companies all over the country. When you're from the University of Michigan and Ann Arbor, it's got credibility and a huge alumni base."
In a very real sense, the future new economy of Ann Arbor and Southeast Michigan is linked to the success of U-M's commercialization. It's fitting that one of the most recent announcements by the university is a brand for its licensed technological start-ups. Taking the lead of "Intel Inside," these companies will be known as "powered by Michigan."
Dennis Archambault is a frequent contributor to Metromode and Model D. This is his first story for Concentrate.
Photos:
Larry Freed of ForeSee
Ken Nisbet-Director of Tech Transfer
Sheri Teodoru-CFI Group
Tech Transfer
ForeSee OfficeAll Photos by Dave Lewinski