What’s NEXT for Florida? Ask Alex Sink

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Alex Sink

I love former politicians.  They learn to fly once their political parties no longer tether them to the ground.  In the case of Alex Sink, it’s more like soaring than flying.  Ms. Sink is the former CFO of the State of Florida and ran an unsuccessful campaign for governor two years ago.  Before politics, she was a banker and a really good one at that.  She enjoyed a reputation as someone who truly got to know her clients’ business.

With that as a background, it surprised no one when she founded the Florida NEXT Foundation last year.  It’s mission?  To “empower young people, entrepreneurs and small businesses so they can drive the innovation needed to enhance Florida’s economy and quality of life”.

I had the pleasure of hosting a luncheon at which Alex was in attendance last week along with my partners at The SCA Group. The attendees included business owners, professionals and executives.  It was interesting to watch Alex hold court.  Like all great leaders, she listens more than she talks.

We had a far ranging conversation covering education, business incubation and, most of all, how we keep our best talent from relocating to another state. 

This last topic was of great interest to one of our guests, Dan Madden.  Dan is COO/CIO of Lake Worth based Eastern Metal Supply.  He is also a Ph.D. candidate at Nova Southeastern University and is in the process of founding a non-profit of his own.  The “95 Research Corridor Alliance” would nurture technology businesses in Southeast Florida.

With everything he is involved with, I wondered why he would make time for this new initiative.  “Because I don’t want to have to travel to Texas or California to visit my kids when they graduate from college,” he told me. 

Those are two very interesting states when you think of nurturing business.  California, of course, is home to Silicon Valley, highly concentrated with venture capitalists and tech entrepreneurs.  Texas’ claim to fame in this regard is Austin, home to the University of Texas and a burgeoning tech incubator in its own right. 

But, beyond that, the two states are very different.  California – the Golden State – has been a center of innovation and cultural leadership for over a century.  But, the emphasis here should be on the words “has been”.  A recent report of the Federal Reserve Bank of San Francisco concluded, “economies of states ranked high on tax-and-cost indexes [meaning lower taxes and costs]…  tended to grow faster than the states ranked lower”. 

Meanwhile, low tax and low cost Texas – with its low propensity to provide social services and quality public education – is thriving.  Now, before you conclude it’s all because of oil, I’ll tell you that the Dallas Federal Reserve Bank has reported that only 2.4% of Texas employment is in the oil and gas industry.  And, Texas’ job growth has been more than triple that of California over the last 20 years.

So, how should Florida respond to Dan Madden’s desire to keep his kids closer to home?  Should we become California with its first class public schools and infrastructure?  Or Texas with its 19^th Century pioneer spirit? 

Well, my answer is neither.  We shouldn’t pursue job growth so single-mindedly that we sacrifice efforts to improve public education.  The workforce of the future will be better educated than past or even current employees or else they’ll be waiting tables.

In other words, the fundamentals of attracting businesses and high content jobs to Florida are low cost and low taxes coupled with a well-educated workforce.  In a micro sense, Dan Madden’s 95 Research Corridor Alliance is focused on incubating businesses, especially high technology businesses – info, bio or nano.  In the macro sense, Alex Sink’s Florida NEXT is about mixing the right cocktail of entrepreneurial energy, government policy and infrastructure. 

Florida is a small business state.  In the tri-county area that makes up the Miami metropolis, there are about 3000 businesses with more than $10 Million annual revenue.  Of those, only 300 exceed $100 Million. 

We keep hearing that small businesses drive job growth and that’s true.  But, it’s not universally true.  A November report by McKinsey & Company identified the top tier of job creators by industry – heavy construction, social services, industrial instrumentation, chemicals and utilities.  So, should Florida focus on attracting those industries?  And, how should we take into account the wave of mobile technology that is destroying jobs in airports, publishing and banking?  What jobs will be created?  What companies will thrive?

Whatever the answers are – and, I don’t think there is only one right answer – the LEADERSHIP provided by both Ms. Sink and Mr. Madden will be critical to our success.

Is the Education We Want, the Education We Need?

German apprentice steelmaker

My Dad never went to college. He was about four months into a six month hitch in the Army on December 7, 1941 -- that day of infamy. When he returned from the war four years later, one thing led to another and… well, he never went to college.


Perhaps for that reason, I was programmed to go to college from an age earlier than I can remember. It was a matter of faith. I never questioned it -- never felt the need to. So, it seems odd to me that some people are questioning the value of a college degree.

Last week, the Wall Street Journal published an article (Education Slowdown Threatens U.S. ) summarizing the studies of two Harvard economists. Professors Claudia Goldin and Lawrence Katz have calculated the average years of schooling for native born Americans since 1876. Today, the average 30 year old has only 8 months more education than their parents. This contrasts to 1980 when the gap was about 2 years. The Journal posits that this factoid does not bode well for our nation. After all, college grads have fared pretty well during this extended down turn with an unemployment rate of 4.2%, about half of the rate for those with only a High School diploma.

From the Wall Street Journal

The article included a graphic comparing the percentage of the US population that has attained a college degree to other countries. The US was 14th on a list that was led by S. Korea, Canada and Japan. What struck me, however, was that Germany – that’s right, Germany – was 25th on the list.

We all know about Germany, right? It is the economic engine of Europe. It is highly industrialized, produces great manufactured products and runs a trade surplus of about 15 Billion Euros per year. So, if a college degree is so important, how does Germany do it?

Perhaps part of the answer lies in Germany’s apprenticeship program. The tradition of apprenticeship in Europe goes back to the Middle Ages. It is embedded in German society, driven by industry demand and put to good use by high tech manufacturers. The “dual education” system combines on the job training with classroom vocational instruction. Young Germans can choose among 356 occupations including medical assistant, industrial management or optician. It is also a government program.

In this country, ‘A’ students go to Harvard, MIT or Stanford if they can afford it. If not, they may have the opportunity to attend great public universities like the University of Michigan, Indiana University or the University of California at Berkeley.

But, what about the ‘B’ students and ‘C’ students? Many are getting business degrees at lesser schools. Is there value to that approach?

Early in my career, I worked at Citicorp and Goldman Sachs. We hired the best and brightest from the top business schools including those mentioned above. They were management trainees and were paid very well. Smaller businesses couldn’t compete with those compensation packages.

In a small company, you need people with experience, not trainees. So, who will hire the ‘B’ and ‘C’ students? What value is there in a business school degree from No Name University?

Here in Florida, the Dean of the business school at Nova Southeastern University, Dr. Michael Fields, created an innovative program – a Sales Institute -- requiring every business school student to attend at least four courses in sales and sales management. Dr. Fields met resistance from his most important constituents – the faculty and the students.

However, there was one group that loved the program – business owners. The idea that they might be able to hire people who were ready to produce revenue was very appealing. Faculty and students don’t see the value in the less intellectual skill base of the sales profession. Employers see dollar signs.

But you don’t go for an MBA to end up as an apprentice. And, that was the perception of Nova’s program.

But, what’s wrong with apprenticeships? What if we had an education system that provided the real world skills that industry demands?

In Albany, NY, the College of Nanoscale Science and Engineering was started with $1B provided by the state of NY and an additional $13B from industry. The college is educating Americans in nanotechnology used in the manufacture of computer chips and other miniaturized electronic devices. The college has created over 13,000 jobs in that rust belt city and promises to produce graduates with world class skills.

The US Department of Labor has created a program to support structured apprenticeships through the office of Education and Training. Reflecting the political reality of this country, the DOL uses funds that have been reallocated from other projects to support industry led efforts to create apprenticeships.

One example is the National Information Technology Apprenticeship System created by the Computer Technology Industry Association (CompTIA). NITAS took two years to develop and has a goal of training at least 7 million workers in the IT trades. The structure is noteworthy. The government sponsors the program but does not fully fund it, regulate it or make it mandatory. The industry set standards and participates voluntarily because it sees benefit in hiring workers who are more productive on Day One of employment.

The net is this. A better trained, more productive workforce will make it more attractive for free enterprise corporations to invest and create jobs in this country. These jobs will have higher wages than low skill service jobs. Higher wages increase demand for goods and services and grow the economy.

There has been much written about our broken public education system. And, indeed I agree with most of the criticisms. But, if you could fix the problem tomorrow for, say, all the third graders in America, we would still be 20 years away from feeling the economic impact. Apprenticeships can have an almost immediate impact and don’t require tax dollars to develop.

The ultimate question is whether initiatives that take us in this direction will encounter the same resistance that Dr. Fields encountered. Are Americans ready to have their children become apprentices rather than college grads?

Or, to put it another way, would my Dad have approved? Or, your Dad?