As published in the September 1, 2008 Toledo Business Journal
Rob Robinson
IP Dynamics, LLC
Strong corporate
leadership needed
Toledo Business Journal recently interviewed Rob Robinson, principal of IP Dynamics, LLC and former president and chairman of the board of the Lucas County Improvement Corporation (LCIC). He shared the following thoughts.
Toledo Business Journal: What were the major factors in your recent decision to resign as chairman of the board of the Lucas County Improvement Corporation?
Rob Robinson: I think the major factor is the letter that I have showed you. (Editor's note: A recent letter from Robinson's attorney stated that the nature of IP Dynamics, LLC's business and the LCIC's public purpose are uniquely suited to create conflicts as well as potential conflicts.) That was the driving force. I felt that it could become an impediment, actually slowing down progress rather than speeding up progress.
So, in the purest, most analytical, and pristine [way], the answer is the potential of conflict of interest.
I thought - in that pristine and absolute sense - that the conflicts could have been dealt with. However, you then need to look around and account for the environment in which you're playing. And when you're playing in the environment that we are - where things appear to be so politically motivated and done so seemingly without conscience and so seemingly without regard for consequences - then you cannot contemplate that finite line of conflict of interest being a rational process.
In large part, that's because, in playing out any kind of an allegation, there's the "reality" of such an allegation, and then there's just the sort of qualitative damage, the perception, that's done just by the fact that it's thrown out there. It just becomes a distraction, and I see the probability of that happening - for somebody like me who is somewhat outspoken - being highly likely.
TBJ: Commissioner Ben Konop is currently proposing that the LCIC be returned as a department of Lucas County government and that its staff be reduced. What are your thoughts on this?
RR: I think that I had an opportunity to view the LCIC from the inside, and I had a chance to be a part of it, albeit for a short period of time. I find the LCIC to be a very vital part, or at least potentially a very vital part, of the economic development process in northwest Ohio. Lord knows we need that.
To just stand and have your arms crossed, throw out these slings and arrows - which are largely baseless - and have the "my way or the highway" approach be the only approach you're willing to take, I think is counterproductive.
I extended to Commissioner Konop in my early days the notion that he had some points that I agreed with. I've told a number of people that I used to walk around with his proposal with yellow lines highlighting what I thought was good about his proposal and offered to work with him to get the best of all worlds. Not interested.
I was afforded one opportunity to go to his office and talk before I even took the office with LCIC. After that we had no further direct contact whatsoever. He had no idea what was in my head. He had no idea what I was trying to accomplish. He just sat in his office and he would come out once a week and damn the LCIC.
I never saw an alternative playbook that had substance. I never saw him propose anything concrete other than this nebulous "bring it back in the county and we'll do it." That's not a plan.
I have often likened it to [the University of] Michigan's new football coach coming in. He did not like Michigan's pro-style of offense. But at least he's saying, "We're going to get rid of the pro-style offense and we're going to insert a spread offense." In contrast, Commissioner Konop is saying, "We're going to get rid of the LCIC." What's the alternative?
I find Commissioner Konop to be well intentioned; I have high regard for his intentions. I have very little regard for how he's going about it. I think he needs to learn how to play on a team.
TBJ: Can you discuss your thoughts on the LCIC's role in conducting retention and expansion (R&E), business development support of existing companies in Lucas County, and the importance of this work?
RR: When I came into the LCIC world - in conjunction with Matt Sapara and the executive committee of the LCIC as well as the other players of the economic development components in northwest Ohio, including the Chamber of Commerce, the Regional Growth Partnership (RGP), and the Toledo-Lucas County Port Authority - I asked, "What role do you all think that the LCIC should play? What position do you want us to play?"
I had my own thoughts as to what that should be. One of the thoughts that I had was that it should be the keeper of the key for the marketing plan. And the marketing plan should contain a sales plan. And I felt that, if you look at this like a privately held organization, that the sales plan is the preeminent component of driving the business. Nothing happens until somebody buys something. And when I look at a sales plan, there are only three possible boxes: current customers, prospective customers, and those who said "no." That is the entire universe.
I have said, and still say today, that the most important component you have in any sales plan is your current customers. If you can't keep your current customers happy, then you really don't need to spend a lot of time looking for new customers, because they won't come.
So, in playing that out in discussion with these other groups around town, I felt that the LCIC should house the sales force. Well, the prospective customer component was claimed by the RGP. Okay, let that go to the RGP. But the retention piece I saw as one of the most important things that the LCIC could do.
We immediately, through Matt (Sapara), embarked on a process of going out and contacting current customers to find out what's in their head. The answer was not very pretty. A lot of current customers would just as soon not be here. I talked to a moving van company where I was told that they had "x" number of moves in the Toledo area in a given year and that all of them were outbound. That's not a good situation.
I had talked with the heads of companies who were enormously displeased, and I was told by a number of them, "I wouldn't bring another job to Toledo if my life depended on it."
I talked to what I consider to be the real sales force, and that was the developers and the commercial real estate people. And they rolled their eyes and said, "Why would I even think about bringing somebody here? My work is being done in Charlotte, Texas, Denver, and places like that."
Why is that? That is because people on the outside can see all this political uproar going on in this area, and they can't afford a dry well. They can't take a chance on coming to Toledo. And they call up their friends who already have businesses here and find out that they are waiting for the moving van. That's got to be turned around.
I think that, by decree, the LCIC is the [avenue] for dealing with customer retention. And unless it's done in a meaningful way, these people are going to continue to feel this way. I could give you names of big, successful companies that wouldn't bring a job here if their lives depended on it.
If the LCIC doesn't do that, there's no one else going to unless there is a rework of how we do economic development. I think the LCIC could have been, and still can be, organized in such a way as to drive the retention program. It is the keeper of the toolbox for public economic incentives, but I've heard horror stories about people trying to ferret their way through the area's political spectrums without an enabler such as the LCIC. But the LCIC is not as effective as it could be, largely because funding providers won't let them put the resources behind getting the right team and best resources on the field.
TBJ: What role do you see for private sector funding in the LCIC's future?
RR: I think there's a role there that must be recognized. The fact of the matter is that "this area" has to determine how it wants to go about the business of economic development. And it has to provide for the funding of that structure, whatever it is determined to be.
One of the problems that befuddle Toledo is that it's in what an economist would call a zone of diminishing returns. It's kind of like going to the doctor. The first thing you have to do is discover what the problem is. Then you have to look deeper and find out if that's the real disease or if that's a symptom of the disease.
I think we tend to deal a lot with symptoms without researching what the disease is. So I think we have two diseases in this town. Both are curable, but only if we aggressively get after curing them.
The first is that we are operating in that realm I referred to as diminishing returns. If that's the disease, then there are certain antidotes for dealing with that disease. The objective, if you're on the economies of scale side of things, is to keep trying to push the ball up the bell shaped curve until you get to the optimal point (which in practice nobody is ever able to achieve or maintain). But, if you keep trying to push on that, you'll go into diminishing returns. And that's where we are.
Things change in diminishing returns. One of the things that we need to achieve to get back to scale is economic development. Well, who is going to fund it? One of the first things that happens in the politics of diminishing returns is that you can no longer afford to govern yourself the way you have historically done. Tax revenues begin to fall off and thus become more and more scarce. At the same time, the need for funds goes up because poverty goes up. So to close the gap, politicians start chipping away at the funding of certain things. One of the things that they oftentimes eliminate is the very "medications" you need to cure your disease.
So, you get politicians "scuttle butting" about clipping this and clipping that, and they say politically motivated things. And, ultimately, what they wind up doing is short circuiting funding to things like economic development...because it's more esoteric with a longer-term payback; it doesn't have nearly the appeasement ability as a concrete thing such as repaving a street. Repave a street, treat a symptom. Flow money to economic development, cure a disease.
The fact of the matter is, political funds stop short of what they need to be for an entity like the LCIC, and then the private sector has to pick up the burden. If it's unwilling to pick up the burden, then so be it. Suffer the consequences.
The problem is that, especially in this current cycle, the private sector businesses are hurting too, so they don't want any part of putting funding into something that, by the way, they think they are already funding through their taxes. In other cases they say, "We give to the RGP (which for those who do invest in the RGP is a very legitimate claim), we're not giving to two economic development agencies." Without some private funding, though, the LCIC will likely not be able to exist. I would say that, if the private sector doesn't step up, then by the end of this year they'll have to declare an end to the LCIC.
In the longer term, I believe a viable LCIC can generate user fees to facilitate its existence. But, it has to have the chance to attain that funding mechanism.
TBJ: Are there changes to the LCIC's structure that might be beneficial?
RR: Very possibly. We never got that far nor do I think the economic development schematic around here is well enough organized to stand back and actually put together a highly sophisticated "playbook".
I think it would be wonderful to see all of the components of economic development come together, see what really does make sense here, have everything on the table, look at it extremely esoterically, determine what it is that needs to be done, and design that playbook based on what makes sense and what has the very highest probability of driving us back up the diminishing return curve to economic prosperity.
TBJ: What is your opinion of both the City of Toledo and Lucas County operating separate economic development organizations?
RR: In a perfect world, I don't think there would be a city of Toledo and a Lucas County. I think there would be a unigov. As I already said, in our current economic situation, we can't afford to govern ourselves the way we have in the past. In my opinion, there's an enormous amount of wasted money in how we govern ourselves, and it's not just limited to Toledo and Lucas County.
We have the Toledo fiefdom, we have the Lucas County fiefdom, and we also have the Sylvania and Sylvania Township fiefdoms. And, there are many others as well. So you wind up with all these political subdivisions, each of which tax residents in an unending way while producing services which could be streamlined "dramatically", sort of girding in and fighting for their own turf. It just doesn't make sense - to me anyway - in a world that's going global. We should be one area under one government, and everybody should figure out how to get there. We're not. And I don't see anything that's going to change that.
The city of Toledo is broke or going broke or close to broke, depending on which article you read. Nobody is taking charge of all that wasted money.
Which, by the way, leads me to disease number two: leadership. In my opinion, all of this is caused because of the evaporation over time of strong corporate leadership being provided by executives of large local corporations and financial institutions who had their roots in Toledo, never lived anywhere else, and knew not only the history of the area but most likely the individuals who produced that history. Today, that paradigm is totally changed. Our large corporations are global, with management who move here from elsewhere then move away. Banks are parts of super regional organizations that are focused on much larger geographies. There does not exist anymore the strong body of local leaders who will stand up and say "this or that" isn't okay.
I don't mean this to just sound "pejorative", it is just one of those elements that has changed dramatically over time, and we have not ever adjusted to it.
That has a secondary component as well; in the "environment" we have, fewer and fewer people are willing to take a stand on anything, because they don't want to be "hung" by local politicians or media for trying to do good things. And, why should they?
And, the results are upon us. Every time a moving van leaves, our per capita income goes down and our percentage of poverty goes up. I told Carty Finkbeiner, when he was running for Mayor, that his campaign slogan ought to be, "Turn those vans around." We've got to get those vans coming back here.
But, ironically, in light of this, I am very optimistic. I see a veritable goldmine of opportunity in northwest Ohio. I see it, and others see it, too. We just have to expedite whatever the configuration of our economic development efforts are going to be to get everybody to get along and seize the opportunity that's sitting here and staring at us.
Good things can and are happening. For example, the RGP is doing a great job of fostering business growth. They really do have a great team on the field with strong leadership. I have nothing but good things to say about the people we're dealing with at the RGP.
Even the national news media sees our potential and has chronicled it for the nation to read. Go back and drag out a Cleveland Fed study that analyzed Toledo and northwest Ohio. You will see that their study found that our area was loaded with great inventors and entrepreneurs. That rich history faltered as the paradigm shifted. My excitement is caused by the fact that we have found those innovative thinkers are still here. And we can tap into that energy pool. It is here for the taking.
We just have to get after that potential and get over the pettiness of all this political stuff. The opportunities are here.