Tag Archives: corporations

Does Motorola Mobility moving to Chicago weaken the suburbs?

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With the news this past week that Motorola Mobility will be moving from Libertyville to downtown Chicago, a question arose: is Chicago’s gain the suburbs’ loss? Here is part of the discussion:

Rather than a zero-sum game of moving jobs from the suburbs to Chicago, Motorola Mobility’s planned relocation from Libertyville to the Merchandise Mart next year has many upsides. For one it’s another step for the city toward its goal of being a tech hub. That will not only give the company access to a coveted savvy urban workforce but also help Chicago stand out in the increasingly competitive global economy.

“The marketplace for knowledge-based industries favors dense, urban areas — it’s a global phenomenon,” said urban affairs specialit Frank Beal.

“This is not a choice between the city and the suburbs,” added University of Chicago economics professor Austan Goolsbee, “it is between Chicago and some other metro area.”

Goolsbee is correct if one takes a metropolitan view: it doesn’t really matter to the Chicago area if the headquarters is in the Loop or Huntley as long as the jobs, tax revenues, and prestige stay in the region. Yet, this is not so clear from a local perspective: Libertyville loses 3,000 local jobs and Chicago gains them. The mayor of Libertyville is disappointed:

The mayor of north suburban Libertyville says he’s disappointed Motorola Mobility has decided to move its corporate headquarters to downtown Chicago…

The mayor of Libertyville, Terry Weppler, said there are no hard feelings against Emanuel.

“I’ll put our community up against Chicago any day, you know, for any type of amenity whatsoever,” he said…

He said his next plans involve brainstorming what could fill Motorola’s giant corporate campus once it empties out.

I’m not sure Libertyville would win that battle of amenities. And it is clear that Chicago leaders are pretty happy.

But this may be part of a larger trend of large companies seeking out the more exciting and younger life of big cities:

The move brings jobs downtown — part of a reversal of fortune in which the city is now snatching corporations from suburbia. And as a result, a building type with a future that once seemed rock solid now appears under threat. United Airlines vacated its 66-acre Elk Grove Township headquarters — it even has tennis courts — for downtown Chicago beginning in 2007. The campus, designed by SOM, won three different American Institute of Architects awards since its completion in 1968.

The United Airlines campus is for sale. And it isn’t alone. On any given week, the internet and the back pages of trade journals are filled with “for sale” ads for suburban office parks and headquarters. It wasn’t always this way. Much like suburban shopping malls, these corporate utopias — air conditioned, new, private and safe — were once very much the hottest thing around. From the 1960s through the end of the 20th century, corporations — Motorola, Sara Lee, and more — left Chicago for a new life in the ‘burbs.

But now things are changing. Corporations are downsizing and the new generation of workers does not want to toil in the suburbs. A story last week in the Boston Globe discusses how young workers in the tech and creative fields prefer working in cities and getting to work by public transit.
This would fit with recent data suggesting younger adults are not as interested in the suburban life of the Baby Boomers. But it could take some time for suburban communities to figure out what to do with these large office complexes (see an earlier post about the fight in Hoffman Estates about tax breaks for the incomplete Sears complex) , particularly in a down economy where many shopping malls and lifestyle centers are having difficulty.

Of course, the tax breaks to stay in Illinois are still intact with the move:

But Mobility executives pledged a year before the Google takeover to keep Mobility’s well-paying engineering, finance, marketing, design and executive jobs in Illinois so Mobility could benefit from statewide tax credits worth more than $100 million over a 10-year period.

Gov. Pat Quinn said at a news conference in Deerfield that he gave Google “permission” to move from Libertyville to downtown Chicago, since that was the location Google preferred.

Pat Quinn has to provide his permission?

In the end, I would say that moves such as these are not necessarily bad but they could have negative consequences for the community that large corporation is leaving. Just as the big cities of America were hurt by the move of corporations to suburban office parks after World War II, there are negative consequences for suburbs when the move is made in reverse. It will be interesting to see how these moves add to or re-energize urban life. For example, one could look at how many of the Motorola Mobility employees will move to the city after their job moves there. Similarly, is there a way to quantify how much better Motorola Mobility will do once it is located in the city rather than suburbs?

Microsoft promo videos feature a preponderence of McMansions?

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In the middle of a “Xbox music preview,” Paul Thurrot makes an interesting observation about the homes shown in Microsoft promotional videos:

A promotional video then ensued. It was loud and peppy and featured the same overly-white, McMansion-living trendy families that always seem to exist in Microsoft’s promo videos since this is the only life that Microsoft employees in Redmond area understand. But it reveals a few interesting clues about how the Zune Music service will be changing and evolving as it becomes Xbox Music…

I don’t know how accurate this observation is as I don’t regularly watch tech industry promo videos. However, let’s assume it is true. Perhaps McMansion owners are more likely to purchase Microsoft products so Microsoft is simply portraying its target demographic. Perhaps Microsoft critics would love to tie Microsoft to McMansions and put together ideas that Microsoft simply mass produces products that don’t work well in the long run.

What are particular companies or perhaps products that would work well in advertisements with McMansions? A few ideas:

1. McDonald’s. An easy connection: mass production, supersizing, quantity over quality. Both have their enthusiastic detractors. Both seem to continue on anyhow (see this recent piece about a recent jump in sales of McMansions).

2. SUVs. These are commonly put together as symbols of excess and environmental waste. A Hummer would work well here. But what about a Honda CR-V or a Toyota Rav4?

3. Home Depot or any other big box home improvement store. Your mass produced McMansion is falling apart after five years or you need materials for a big brick fireplace on your 300 square foot patio? Save money and buy whatever you need here.

Contrast this with companies that might rather drop dead than be caught advertising with McMansions. Apple: not exactly the image they are trying to portray. Ikea tends to go with smaller spaces. Trendy companies as well as green products likely want to avoid being tied to McMansions.

What is the future of Facebook if half of Americans think it is a fad?

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A new survey reveals some controversy in how long Americans think Facebook will last:

Half of Americans think Facebook is a passing fad, according to the results of a new Associated Press-CNBC poll. And, in the run-up to the social network’s initial public offering of stock, half of Americans also say the social network’s expected asking price is too high…

The public overall is similarly divided on the company’s future. Just under half of adults (46 percent) predict a short timeline for Facebook, while 43 percent say it has staying power.

I’m not sure why we should think that average Americans should be experts on the value of Facebook’s IPO but the questions about the staying power of Facebook are pretty fascinating. I wonder what exactly it means that people call Facebook a fad: does that mean it is too popular (this could go along with the idea that Facebook is overvalued) or that it will someday disappear (maybe replaced, maybe simply fades away)? These are two very different options: Facebook’s membership numbers will probably level off at some point but that is very different than suggesting Facebook may not be around in ten years.

To me, these figures suggest several things:

1. The IPO could be a very important turning point for Facebook, perhaps akin of a transition from young adulthood to becoming a mature company. Will the company continue to grow or is this the beginning of the end (particularly in public perceptions)?

2. There is still room for Facebook to become more integrated into the daily life of people, particularly older Americans. Perhaps the number of users can’t increase all that much but the time one spends on Facebook can.

3. Facebook still needs to show a certain segment of the population that it is “worthwhile” and not just a “fad. “I’m not sure exactly what this would look like. It could include giving Facebook more functions so that more online activity, like shopping (though respondents to this survey are not very favorable about the idea of giving Facebook this data), takes place through Facebook. Or perhaps it includes convincing people that the social interaction on Facebook is now how normal social interaction takes place.

On the whole, this means that there is a lot for Facebook still to do.

“Facebook as McMansion”

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Amidst the conversation and consternation regarding Facebook’s recent purchase of Instagram, one commentator makes this comparison: “Facebook as McMansion.”

In the flurry of blog posts, tweets and status updates about the Instagram deal, Facebook was likened to Dr. Evil, Foxconn, the North Korean army, and the Evil Empire — precisely the same nickname given to Microsoft in its monopoly phase.

In his (incredibly fun) take on the acquisition for New York magazine, Paul Ford suggested that Facebook buying Instagram was “like if Coldplay acquired Dirty Projectors, or a Gang of Four reunion was sponsored by Foxconn.” He also called Facebook the “great alien presence that just hovers over our cities, year after year, as we wait and fear,” and likened it to the “monolith in the movie 2001.” Big and scary.

According to BuzzFeed’s Matt Buchanan, “beloathed” Facebook’s purchase of “beloved” Instagram means “the neighborhood just got demolished by giant bulldozers loaded with money and is being paved over with 800 million McMansions.” Facebook as McMansion — a symbol for complacent corporate culture and stodginess if there ever was one…

We love an underdog, and we’d probably love Facebook more if we thought it were one. While snapping up Instagram allowed Facebook do to away with a competitor, it may be that a rival — or even the illusion of one — is exactly what it now needs.

While the other comparisons aren’t exactly flattering, the comparison to a McMansion is not a good thing for Facebook. Although the term McMansion has multiple meanings, it is clearly a negative label and is tied to these ideas: excessively large, much larger than “average homes,” and a one size fits all approach.

Perhaps these comparisons are getting at a larger issue: is there a point when Facebook plateaus or continuously encounters widespread pushback because it is too big and/or too popular? There will always be a small group of people who dislike the dominant company or product just because it is the biggest and can throw its weight around. At the same time, there could be competitors who arise or circumstances online and with computers that change in such a way that Facebook is left behind. See the case of Microsoft who still has a lot of products and influence certainly its way past its peak.

Obama campaign data mining information for fundraising, voters

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Politico reports on how the Obama campaign is using data mining in its quest to win reelection:

Obama for America has already invested millions of dollars in sophisticated Internet messaging, marketing and fundraising efforts that rely on personal data sometimes offered up voluntarily — like posts on a Facebook page— but sometimes not.

And according to a campaign official and former Obama staffer, the campaign’s Chicago-based headquarters has built a centralized digital database of information about millions of potential Obama voters.

It all means Obama is finding it easier than ever to merge offline data, such as voter files and information purchased from data brokers, with online information to target people with messages that may appeal to their personal tastes. Privacy advocates say it’s just the sort of digital snooping that his new privacy project is supposed to discourage…

There’s an added twist for Obama: He’s making these moves at the same moment his administration is pushing the virtues of online privacy, last month proposing a consumer bill of rights to protect it.

This has been brewing for some time: back in July 2011, Ben Smith reported that the Obama campaign was advertising for “Predictive Modeling/Data Mining Scientists and Analysts.”

I really want to ask: what took so long? This is a gold mine for candidates.

I’ll be curious to see how far these hypocrisy charges go. If companies are going to make money off the Internet, don’t they have to have some of these abilities to put information together? Which group do people trust less to have their information: corporations or political parties?

When Aon leaves for London, is Chicago still a world class city?

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With the news this week that Aon Corp. is moving its headquarters from Chicago to London, a familiar question arises: will Chicago take a hit to its image as a world class city?

“It is appropriate to ask that question, not as a general hand-wringing kind of thing, but in the classic 120-year or more tradition of Chicago,” said urban strategist Paul O’Connor, a former deputy director of the Illinois Department of Commerce and Economic Development who was founding executive director of the 13-year-old World Business Chicago.

“You do have a special case here in Chicago insofar as the business leadership has for at least 120 years been intimately involved in the strategic growth and development of the city as an international center,” O’Connor said. “This is a phenomenon you don’t find historically in any other big American city. So the capabilities of the leadership of Chicago business to affect long-term outcomes of global competitiveness and whether this remains an easy place to attract the top level of talent, that’s the core issue.”…

“There are underpinnings that matter,” O’Connor, now with architectural firm Skidmore, Owings & Merrill, said from China, where he’s working on a project. “You look through the board of Aon. These people were like the college of cardinals of Chicago boosters. So if you’ve got a good explanation that you can pick up (more money) by doing this, great. But if those college of cardinals of Chicago boosters don’t stay on it and make sure that you are a competitive business environment, then things do erode. … You’ve got to stay hungry.”…

“The thing you have to look out for is that you don’t slip (as a city in the world’s eyes),” O’Connor said. “That’s why everybody should be saying the rosary to make sure everything goes nicely at the NATO/G-8 (meetings set to bring international leaders and protesters to Chicago in May), so you don’t send bad messages. On the one hand, you have reality, which really matters. On the other, you have perception, which also matters, but I’d rather have reality over perception.”

The issue here seems to be perceptions, not the reality that Chicago still contains a number of headquarters. The reality is that Chicago truly is a world-class city – one 2010 ranking had Chicago at #6 in the world. The moves of highly visible companies might be problematic for politicians who have to create and defend a record on jobs but Aon moving to London will not knock down Chicago a notch unless multiple companies follow suit.

At the same time, perceptions are important. Maybe the better question to ask here is why Chicago needs to keep reaffirming its status as an important city. Perhaps it goes back to that “Second City” nickname that put Chicago behind New York but is also a reminder that Los Angeles has zoomed ahead in population (and status?) as well. Perhaps it is because Chicago knows it is part of the Rust Belt and has been a rare city that has been successful despite the loss of many manufacturing jobs. In the end, why doesn’t have Chicago have more confidence in its standing? The nervousness might motivate Chicago to pursue greater things but it also looks silly at times.

My verdict: Chicago will be fine. That doesn’t mean the city shouldn’t continue to try to woo new corporations or help encourage new start-ups. At the same time, Chicago should operate from a position of strength, selling the better aspects of Chicago, rather than a posture of weakness where any move might topple Chicago from the circle of great cities.

Quick Review: The Greatest Movie Ever Sold

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I recently viewed the latest (April 2011 release) Morgan Spurlock film The Greatest Movie Ever Sold. Here are a few thoughts about this film which could be a nice conversation starter for a number of sociology courses.

1. If you know of Morgan Spurlock and his “formula” (Supersize Me, the TV show 30 Days), you won’t be surprised by how this film goes as Spurlock tries to finance his documentary about product placement (“brand integration”) by having corporations pay to sponsor it. Even though the process may not be a surprise, the movie still feels fresh in a way that many documentaries can’t match.

2. At the most basic level, this film is about raising awareness regarding advertising. It treads some familiar ground about how companies are really selling images or aspirations and how Americans are bombarded with these ideas. While Spurlock doesn’t offer much of a solution at the end (go out into nature for a little?), he certainly is drawing attention to an issue worth paying attention to.

3. Here are a few of the more intriguing sociological insights I picked out of the film:

3a. Spurlock wants to pull back the curtain on product placement and marketing but interestingly, the big companies don’t want to participate. In the end, he catches the attention (and money) of mostly smaller/challenger brands who don’t have the big marketing budgets. From a Marxist perspective, we could suggest that the big companies want to continue to “hoodwink” consumers while the challengers are really interested in doing anything to get product exposure, even exposing their marketing tactics.

3b. Spurlock spends some time in Sao Paulo, Brazil, a city that recently banned outdoor advertising. The mayor and residents talk about how this helps eliminate “visual clutter.” Could we imagine this ever happening in an American city? How many of our famous spaces, like Times Square or Las Vegas, would no longer be famous spaces if advertising was not present?

3c. One marketer suggests Spurlock could play off religious imagery, perhaps portraying himself at the Last Supper surrounded by a bunch of companies who want to use him or to show Spurlock carrying a cross covered in advertising stickers (like a stock car in NASCAR). While the marketer suggests this might be considered blasphemous, it would also get a lot of attention. Later in the film, another insider says to Spurlock regarding marketing his film that “the path of salvation” is to “Sell! Sell! Sell!” in America. What does this commentary suggest about the role of religion in marketing and selling “Christian products”?

4. Spurlock leaves us in a tough spot: can we do marketing with integrity? Can one really “buy in” without “selling out”? The answer is unclear but Spurlock provides us an entertaining venue for starting to think about answers to these questions.

(The movie received fairly good reviews from critics: it is 71% fresh, 77 out of 109 reviews were fresh, on RottenTomatoes.com.)

Bill Clinton: “The American Dream has been under assault for 30 years”

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Former President Bill Clinton, speaking as part of the 10 year anniversary of his foundation, said “The American Dream has been under assault for 30 years.” He says this has happened for two (actually three?) reasons:

1. The challenges of globalization and the information age “which eliminated a lot of intermediate jobs.”

2. Corporations once had more equal responsibility among shareholders, communities, and workers (roughly 35-40 years ago and earlier) whereas today they act as individuals only beholden to shareholders.

3. A thirty year long anti-government rant that says “the government is the source of all our problems.”

Is this just a list of Democratic Party talking points?

More seriously, Clinton’s first point is well accepted: the world has changed. Globalization and information have changed the American and global economy and America is still struggling to catch up. The Rust Belt cities of the Northeast and Midwest are a great example: the departure of good-paying manufacturing jobs has shifted the landscape and cities and states are still scrambling to fill this void. The second issue regarding corporations is also notable: the quest for profits and meeting shareholder’s expectations has seemed to increase. The gap between CEO pay and that of the average worker has only widened. The median income for all Americans has dropped while some corporations earn record profits. The third point sounds more like a political argument though Clinton’s suggestion that there has been a relative lack of interest in public-private partnerships to address some of these issues may have some merit.

Clinton is in a long line of presidents who have promoted the American Dream which is typically thought to include homeownership, a good education, and middle-class standard of living. It would be interesting to hear what Clinton now considers to be the American Dream to be and how individuals and the country can achieve it. A measure of the American dream, homeownership, actually had increased in the last 30 years until the last few years of economic crisis. Is Clinton suggesting that fewer people now have access to the American Dream or something else?

Additionally, Clinton’s words have some sway since the public perception is that he was the president who presided over the last boom era in the United States.

Whether corporate tax breaks help the average citizen

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Phil Rosenthal tackles an interesting question that pertains to Illinois and Chicago after recent news about certain companies threatening to leave unless they get more tax breaks: do such deals help the average citizen? While the conclusion is unclear, here is a bit about the effect of TIF (Tax Increment Financing) Districts which typically generate funds for localized development and infrastructure:

The TIF has become a fashionable way for a municipality to encourage a business to set up shop in a particular locale it might not have chosen otherwise.  Some, however, see TIFs as too often just a handout for businesses that want to go somewhere.

“They’re a very popular tool for economic development,” Rebecca Hendrick, an associate professor in political science at the University of Illinois at Chicago, whose book, “Managing the Fiscal Metropolis,” is due out in November. “There are a lot of discrepancies in the empirical research as to whether they’ve had the intended effect. Would the steel company have come in but for the TIF, or would it have come in anyway?”…

“But it turns out that tax rates go up in the entire jurisdiction in the city of Chicago as a result of a TIF being created in the city of Chicago because the way the property tax works is kind of a zero-sum game. If someone gets money, someone else has to pay for it. … Plus, it’s also off-budget.”

Chicago has a lot of TIF districts so this is not a small issue. Of course, there are different ways to measure the benefits of such development for the average citizen: should it lead to a smaller property tax bill? Should it lead to more city and state services since they should have more tax dollars? Should it lead to a better quality of life in rebounding neighborhoods? Should it lead to more jobs? The common focus seems to be on jobs, as the recent offer from Amazon.com to the State of California illustrates. But these tax breaks often lead to a very limited number of jobs.

The article also hints that certain kinds of economic change receive press coverage while others do not:

A steel company moving to Chicago gets our attention. One person losing his or her home generally doesn’t. Even 100 people losing their homes might not make the papers.

“One hundred people losing their mortgages may involve the same amount of money as a steel company moving to Chicago,” Bowman said. “One of the reasons that TIF money is provided to these businesses is it does get more attention, and people feel like, ‘Maybe things are starting to turn around if Chicago’s more attractive than Cleveland.'”

So is this more of a journalism problem? If newspapers and other media sources are more interested in the “movers and shakers,” typically politicians, business leaders, and entertainment/celebrity figures, does this help the average citizen? I assume the media would suggest that they are the public “watchdog,” helping inform people about abuses of power. But, the media, often in big corporations themselves, can also easily be cozy with these bigger interests and also want to be boosters and help improve the image of their community.

In these poor economic times, I imagine we will be hearing more about corporate tax breaks and whether local, state, and national governments should be in the business of handing them out.

A brief history of the rise of AT&T

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The young might only think of AT&T as one of the major cell phone carriers. But this ignores AT&T’s long and important history that includes many innovations and cycles the company has gone through:

But AT&T didn’t just conquer the 20th-century via clever marketing, mergers, and strategic deals with the government. In an era profoundly distrustful of corporations, it justified its expansion as a bid to offer “universal service” to the country. “One policy, one system, universal service,” became AT&T’s motto. Rather than breaking up the system, the government would regulate it as a “natural monopoly.”…

For the next 50 years, AT&T would consistently repeat the same cycle to avoid being broken up by the government—innovate, acquire, strategically retreat, then move forward again with a redefined mission. When the public reacted badly to the network’s attempt to take over broadcast radio, AT&T backed off in exchange for a monopoly on wireline service between radio stations. When the government again raised the spectre of a breakup after the Second World War, AT&T agreed to get out of the computer software business, leasing innovations like the Unix operating system to universities for a nominal fee.

Interesting. The research and development arm of this company produced a number of important technological breakthroughs that helped the United States rise to the top of the world heap in the mid 1950s. The company may be once again on the verge of a monopoly but it is hard to refute, to paraphrase a well-known saying, that “what has been good for AT&T has been good for America.”