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Compass June 2008: What is a Micropolis? Why Should You Care?

By Charlie Grantham

If you want to get money from the government you need to have an address to send the check. As our urban landscape has changed in the past few decades it seems that a lot of old addresses, like Phoenix, Arizona, don't work so well for all those people who live just across the city line.

The elected officials (and their bureaucratic subordinates) who want to feed from the Federal trough find it more difficult to get their share of things like roads, water, schools, and other nice urban amenities that their citizens demand. The US Census Bureau has helped them in a sense, by creating some new "post office" addresses - or statistical areas. These new ones are called "micropolitan" areas.

So just what are these new "micropolises"? Technically, a micropolis is a geographic region that includes at least one town of 10,000 to 49,999 people (it may have several), with proportionally few of its residents who commute outside the area. That means that it is largely self-sufficient in an economic sense.

The government recently determined that there were 567 such micropolises within the continental United States. More than 28 million people, or one in ten Americans, reside in those regions; they are growing at about 10% per year on average. Political and economic power is shifting from large cities to these micropolitan areas - pure and simple. Generally, the inhabitants of micropolises tend to be in the top half of the socio-economic strata.

There are some very good reasons for this little demographic sleight-of-hand.

A large part of new growth migrates to these areas. Those in the know observe that these now semi-rural areas are desired places where people are moving - even more so as soon as the "R-word" (Recession) again fades from our daily vocabulary. So, guess where the political clout now shifts? "Holy cow," politicians say, "let's make sure we can send checks to those folks who vote us into office." Viola-"micropolitan" areas.

Why should you care? If you are a business leader even remotely concerned about having good employees you need to pay attention to this human capital paradigm shift.

The key business challenge in the first decades of the 21st century is ready access to this kind of intellectual capital. There simply isn't enough human talent - especially knowledge workers - to meet the needs of growing business enterprises.

Talent flows to the geographic areas that have more social capital than others.

And these self-contained "micropolises" (as compared to metropolises, which were the magnet for talent during the industrial era) are the new frontier. To borrow an old phrase, business leaders understand that, when attracting human capital today, "Mohammed must now go to the mountain."

Business development flourishes in these areas because they are where the talent is. And these business successes create wealth, which then is re-invested in more social and economic development in these micropolises. The best known examples of this success can be found in Palo Alto, California (outside San Francisco); Austin, Texas (in the center of the D/FW, Houston and San Antonio "Triangle") and Boulder, Colorado (just outside Denver).

These towns were consciously developed (or redefined) to offer required physical, high-tech and social services, producing a crucible for innovation, high quality of life, and a long-term sustainable economy. They seem almost immune to the cyclical forces of the industrial business cycle. It is also important to note that each of these communities has a renowned university at its core-another clue to the puzzle of where to put your business.

Let's break this idea down a bit. Micropolises are newly-minted geographic areas of distinction that are becoming centers of political power, economic innovation, and talent location. People who live in Micropolitan areas (and those attracted to them) have no interest in commuting into large cities. So, if you as a business depend on talent to be competitive, you had better figure out where these areas are and go there - or at least learn to operate virtually drawing on the talent that's located there.

The practical implication of all this is that businesses have a demand for talent; micropolitan areas have the supply. These two must forge partnerships if both are to be successful. The good news is that technology can provide the "glue" to stick them together. That's why we believe that a network of 500-600 Business Community Centers is being born today, forming the web-based talent pool of the 21st century.

So what do you do now to leverage this emerging reality? Call in your head of real estate and ask him or her to develop a "strategy of place" that will give your firm first crack at recruiting people who live in these micropolitan areas. You don't need look over your shoulder just yet-but you can bet your key competitor is already playing this game of corporate chess in which making the first move is the key to winning.

Please direct your comments to us at any time. We'd love to publish your reactions and suggestions in a future newsletter. Or post a comment directly at the blog version of the newsletter. And thanks for listening.

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