TWIN CITIES BUSINESS, Vol

TWINS: SHOW ME THE NUMBERS | CHARLIE WEAVER Q&A | EMPTY BUILDINGS, LOWER RENTS?

APRIL 2018 tcbmag.com

Breaking Through Women executives define what needs to change to achieve gender parity in Minnesota’s C-suite jobs.

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| APRIL 2018 |

26 36 42 Breaking Through Small Ball Meets Big Data TCB Q&A: Charlie Weaver With women holding only a fraction of top executive jobs As the analytics revolution washes over Target Field, The Minnesota Business Partnership’s executive director

FEATURES at public corporations, key women executives share TCB looks at how data is changing the Minnesota Twins. tackles a workforce shortage, racial achievement gap their strategies for accelerating progress toward parity. By Adam Platt and business competition threats. By Liz Fedor By Liz Fedor

26 36 42 17

46 8 6 32 Commercial Real Estate | Open Spaces Starters Editor’s Note Guest Commentary Office vacancy rates are climbing in the Twin n Local spirits-maker swaps grain for sugar Do as many women want top jobs as men? PLUS Sexual harassment in the Cities, but it’s still tough to find deals in the n The Twin Cities gets a hip-ster check By Dale Kurschner workplace n TRENDING best buildings. Was the Super Bowl pregame a bust? By Linda Holstein By Burl Gilyard n Polaroid loses Minnesota investors 20

COMMENTARY Planting Seeds 52 DEPARTMENTS 12 Bringing the ship home Marketing | The Human Connection Concierge By Rajiv Tandon Special Supplement In a technology-driven world, 10 Twin Cities April at Last marketing agencies recommend how to break By Melinda Nelson 21 Minnesota Census of Women through the communications clutter. Performing Philanthropy in Corporate Leadership By Gene Rebeck 14 Information trends nonprofits cannot ignore St. Catherine University’s Plugged In By Sarah Lutman 2017 examination of the state 58 Top networking opportunities of women in executive and Workforce | Casting A Wider Net By Amanda Ostuni 23 director roles. Minnesota companies need to look beyond Explanation of Benefits their comfort zones to attract workers in a 17 Health care system starting to show cracks competitive marketplace. Amped Up By David Burda By Fran Howard n Big plans for St. Paul mini golf course n Crowdfunding meets gift registry 24 n Health startup goes national with Lyft It’s All Relative Giving up the reins 22 By Tom Hubler Health Beat n New technology enhances anti-cancer cells 62 n Biotech incubator proposes expansion Front Lines n Health care deemed top issue in U.S. Our next Bold North move By Ravi Norman 64 Open Letter Mayo Clinic, our health care Super Bowl By Vance Opperman

TWIN CITIES BUSINESS, Vol. 25, No. 8 © 2017 MSP Communications. The opinions of columnists are their own. Unsolicited manuscripts or artwork will not be returned unless accompanied by a self-addressed, stamped envelope. Telephone 612-339-7571. Fax 612-339-5806. E-mail: [email protected]. TWIN CITIES BUSINESS (ISSN 1072-673X) is published monthly by MSP Communications, 220 S. Sixth St., Suite 500, Minneapolis, MN 55402-4507. Subscriptions available for $24.95 per year; foreign subscriptions, $169.00 per year; back issues, $10.00. To subscribe or change address, visit tcbmag.com/subscriptions.aspx. For back issue requests, contact [email protected] or 612-339-7571. Periodicals postage paid at St. Paul, MN, and at additional mailing offices. POSTMASTER: Send all UAA to CFS. (see DMM707.4.12.5); NON-POSTAL AND MILITARY FACILITIES: send address corrections to TWIN CITIES BUSINESS, Subscription Processing, P.O. Box 5846, Harlan, IA 51593.

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4 TWIN CITIES BUSINESS tcbmag.com APRIL 2018 Nicole Washburn, AIA, LEED AP BD+C Patri Acevedo, AIA, CPHC Director of Operations Principal Market Leader Angela Bolonchuk, PHR, SHRM-CP Director of Human Resources

Linda McCracken-Hunt, FAIA Michelle Mongeon Allen, AIA, LEED AP Principal Market Leader Chief Executive Officer

Tracy Jordre, AIA, LEED AP Amanda Kosior Principal Studio Leader Director of Marketing WE DON’T HIRE WOMEN AT JLG Men, either, for that matter. JLG is filled with people like Michelle Mongeon Allen, who grew up in Towner, North Dakota and brought small town sensibility to the Twin Cities as President of AIA Minnesota. And Linda McCracken-Hunt, born and raised in Philadelphia, who designed the exterior of the new US Bank Stadium and holds the highest professional honor awarded by American Institute of Architects. And Patri Acevedo, a Rapid City transplant from San Juan, whose clients love her so much they invite her to their cattle branding parties – a high honor out west. You don’t have to be a man or a woman to work at JLG; you simply have to be the best.

Inc. Magazine’s 50 Best Places to Work in America 100% EMPLOYEE OWNED MSN Money’s 50 Most Admired Companies in the U.S. jlgarchitects.com A Long Way, but Not Far Enough Gender diversity in senior management roles continues to lag.

EDITOR’S NOTE ix years ago this month, Twin Cities Business em- companies. Closer to home, they hold just 6 percent of the by Dale Kurschner barked on a new annual project tracking women’s CEO positions and 14 percent of the board seats at Min- progress ascending the corporate ranks. nesota’s 100 largest publicly traded companies.” SWe wrote a feature and held a live forum with C-suite I’m happy to say things have improved since I wrote executives, both looking at what organizations are doing to all of that. Today, women hold 8.3 percent of the CEO promote women, literally and figuratively. We also partnered positions at our largest public companies, higher than the with St. Catherine University to publish its annual report on national average. the percentages of women holding top leadership positions In 2011, 72 percent of our largest publicly traded in Minnesota’s largest public companies. companies had at least one woman director; by 2017 it had At the time, I was hopeful that by the end of the decade grown to 83 percent. In 2011, only 32 percent of such com- we would continue to see more women rising to CEO and panies had two or more women directors; today it’s 50 per- other high-level leadership positions and serving on boards. cent. And women now represent 19 percent of all corporate Here’s what I said then: board seats and 20.4 percent of executive officer positions at “Gender equality at work has always seemed natural to those firms, compared with 14.2 percent and 17.4 percent, At our current rate, it me. I work in an industry (communications and publish- respectively, six years earlier. will take more than 50 ing) where women and men are perhaps more equal at top This is important to celebrate. In 2012, St. Kate’s set a years before Minnesota leadership levels than in most other industries. So it’s with goal for Minnesota’s largest public companies: By 2020, sees gender parity in top that in mind that I originally thought that it made sense to those firms would have boards that include 20 percent corporate leadership continue with our magazine’s informal policy of staying women. We’re on track to reach that. away from ‘women in business’ stories or events. The think- But at this rate, it will take 31 years to reach the desired positions. ing was that creating a class of ‘women in business’ would gender parity of 50 percent of Minnesota board seats held separate them rather than help to further blend genders in by women, and 59 years for equal representation in the business. We didn’t C-suite. want to imply there That sounds awful, and to some proves a grand unfair- is a problem when, ness in the promotions arena. Meanwhile, sexual harassment given our perspec- and sexism have gained much deserved attention of late. tive, there isn’t, and Gender parity is delayed by such issues, in some shouldn’t be. instances. But the primary reason we’re not seeing more The percentage Then I noticed equalized leadership ranks is due to myriad, complex issues of women in the how little things had ranging from U.S. corporate culture’s need for a better work/ U.S. labor force changed in the last 10 life balance; to some women’s preconceived notions about grew rapidly years when it comes how they may be judged, regardless of what the rules allow through the 1970s and has remained to the number of or encourage them to do. The issue remains systemic and above 40 percent women in CEO posi- cultural, including how we still program so many children ever since. Yet tions or on corporate to believe they have to fit society’s expectations of what men the percentage boards of directors and women are supposed to be like. of women in top leadership roles in Minnesota, and And there remain important questions left unanswered? has remained low nationally. And upon Are women vying for top corporate jobs in the same pro- since this issue looking into statistics portion as men are? If not, why not? And for those who care, of Mpls. magazine was published in and studies, and what should be done about it, by whom? August 1975. talking with a few We’ve had a fantastic dialogue on this subject going on corporate leaders seven years now. And we continue it this year beginning about this subject, with our annual story (page 26), a provocative guest com- we found there is mentary (page 32) and St. Kate’s annual census report (page indeed a need to talk 32). I invite you to dive in, and then to join us for our annual about it. panel discussion on April 10. tcbmag Women have represented more than 40 percent of the U.S. labor force for nearly 40 years and make up more than 51 percent of all management, professional and related positions. Studies continue to show that financial results improve the closer an executive team or board comes to being equally weighted between women and men. Yet women lead only 3.5 percent of all Fortune 1000

6 TWIN CITIES BUSINESS tcbmag.com APRIL 2018

NEWS | TRENDS | PERSONALITIES | EDITED BY ADAM PLATT

Vodka for Wellness? he popularity of craft alcohol has grown substantially in recent years, but Local distiller Drake’s thinks the time is there’s been a disconnect between that growth and a simultaneous rise of right for organic, non-GMO spirits. interest in healthty eating. Enter Drake’s Organic Spirits, a Minneapolis-based company that Big News Nelson produces the only rum verified as non-GMO (genetically modified organism) by the Non- GMO Project, a nonprofit. Drake’s produces one of only two non-GMO-verified vodkas (it Blue Cross and Blue is also organic/vegan), and Drake’s rum is also the country’s only organic and vegan rum. Shield of Minnesota Founded in 2017, the company raised $3 million through a private placement, and its (Eagan) announced that products have won awards at spirits festivals. Mark Anderson, CEO and co-founder with CEO Michael Guyette wife Kristen, credits top-quality ingredients and a unique distillation and filtration system. was departing in March Most alcohol is made from grain, giving it a harsher, burning quality; Drake’s is made to lead California vision from organic cane sugar, so it has a more natural, agave-like taste and is gluten-free, he services firm VSP explains. Global. The BCBS board The usual distilling process filters alcohol through charcoal, made of bone char; named former Minnesota Drake’s is filtered through coconut fiber, making it vegan. (The products are also certified Supreme Court Justice kosher.) What’s more, to give it better quality, Anderson says, the rum is distilled 12 times, Kathleen Blatz as interim instead of once, as is standard. CEO while it conducts a Prior to conceiving of Drake’s Organic, Anderson founded Captain Drake LLC in 2009 search. to source organic and non-GMO ingredients. It became the largest distributor of organic cane sugar and citric acid, sourced from Colombia. General Mills (Golden Lynch Subsequently, recognizing a gap in the market, in 2015 Anderson hired Norseman Valley) announced it Distillery of Minneapolis to produce white rum with Captain Drake ingredients. Fueled by would buy natural pet a positive reception, Anderson negotiated a deal with a Colombian mill to mass-produce food maker Blue Buffalo rum and vodka on-site. Thus Drake’s Organic Spirits was born (the name was changed to for $8 billion in cash. The avoid conflict with Captain Morgan rum). Connecticut-based com- Drake’s made its local debut in August at Lord Fletcher’s restaurant, selling 17 cases pany registered $1.275 of vodka in seven hours. In five days surrounding the Super Bowl, Drake’s sponsored 14 billion in pet food sales events, including Migos and Gucci Mane concerts. Through 10 days of festivities, it sold in FY17. more than 600 cases at 91 locations, topping $1 million in sales. To date, Drake’s products are approved for sale across 10 states, including about 300 Mayo Clinic (Rochester) locations in Minnesota. The company also has an aged rum in development. announced that CEO Dr. “If you’re going to have a healthier lifestyle and have an adult beverage,” says John Noseworthy would Anderson, “you’re probably going to mix a healthy organic vodka with a healthy organic retire at year’s end. beverage.” —Amanda Ostuni Mayo expects to name a successor by early fall to ensure a smooth transition.

8 TWIN CITIES BUSINESS tcbmag.com APRIL 2018 Hip Check Twin Cities fares poorly on ‘Hipster Index.’

People in Minneapolis and St. Paul think they’re hip. But the MoveHub relocation website thinks they’re so wrong. Late last year, MoveHub compiled the U.S. Hipster Index, purportedly determined by “pure, bohemian data.” Both cities failed to make the Top 20, which included Cincinnati, Salt Lake City and Boise. Take that. Minneapolis ranked 26th on MoveHub’s list of 150 hip cities; St. Paul finished at 43—just one notch below Austin, Texas, apparently no longer a hipster enclave. New Minneapolis Mayor Jacob Frey dismisses the findings with a single riposte: “Any true hipster would know that appearing on a list of top cities for hipsters is so unhip.” While the definition of a “hipster” is highly subjective, the MoveHub survey ranked cities by the presence of four types of businesses: thrift stores, vegan restaurants, microbreweries and tattoo studios. Minneapolis did rank fifth in the microbreweries category, with 6.3 establishments per 100,000 people. The study also factored in apartment rental rate inflation. City ranking surveys have become a mini-industry—perfect for quickly sharing on social media, regardless of a study’s statistical veracity. “We’ve been on the good side of some of them, and we’ve been on the bad sign of some of them,” says Adam Johnson, vice president of marketing and media relations for Visit Saint Paul, the city’s convention and visitors’ bureau. “I’m not going to call them up and complain … I think you’ve got to take it all with a grain of salt.” Johnson points out that back in 2013 another website, RealtyTrac, proclaimed 55101 (Lowertown St. Paul) to be the top hipster zip code in the U.S. The website of California-based RealtyTrac follows foreclosed and defaulted properties. MoveHub is a division of London-based Marketing VF Ltd. Johnson says that Visit Saint Paul does not specifically market the Capital City to hipsters, but notes that it does promote the city’s arts and culture, bicycle friendliness and craft beer scene—all arguably of interest to so-called hipsters. “I wouldn’t say that we actively have a demographic target for the hipster,” says Johnson. But, he adds, “I think I pass no less than four tattoo parlors on my 2-mile commute.” —Burl Gilyard

APRIL 2018 tcbmag.com TWIN CITIES BUSINESS 9 The Pregame One million. With the warmest weather of the Super Bowl period on tap, were In the weeks leading up to Super Bowl LII, it was the magic event organizers able to attract Midwesterners to Super Bowl Live, That Wasn’t number touted regularly by the state’s host committee of just how the Super Bowl Experience and the glories of the zip line and ice Hopes of turning pre-Super Bowl many visitors would be in the Twin Cities to celebrate. Only 125,000 castle that first weekend? Hotel data suggests perhaps not. weekend into a major visitor were expected to come from beyond the metro area, and it was hoped For weekend No. 1, average occupancy rates among Twin Cities magnet were not realized. this number of visitors would be spread over two separate weekends, hotels were down year-over-year, according to data from Tennessee- the first being of particular appeal to regional visitors within 250 miles. based hotel industry research firm “We all did encourage people in the surrounding area and locally STR, with information on a region to come to the events in the prior weekend and early week,” says stretching from Norwood, Minn., to Meet Minneapolis spokeswoman Kristen Montag. Minnesota Super Baldwin, Wis. Super Bowl hosting Bowl Host Committee cities Minneapolis, San Francisco/San spokeswoman Jose and Houston “all saw slight [hotel Hotel traffic during the Super Bowl Andrea Mokros room] supply increases over the previous year,” STR spokeswoman Occupancy Average Daily further clarifies: “We Haley Luther explains, “so the decline in occupancy could be reflecting Occupancy Average Daily Date Rate Change Rate Change Rate Rate have always talked that.” Montag of Meet Minneapolis also notes 2017’s Great Northern from 2017 from 2017 about the 10 days Festival was in January rather than February, another possible reason Thursday, January 25 58.8% -0.8% $117.75 +5% of festivities in two for the drop in 2018. Friday, January 26 60.7% -1.4% $115.46 +11.5% distinct events: the Nevertheless, the Host Committee contends it reached its Saturday, January 27 66.3% -1.6% $116.49 +12.6% first six days, which benchmarks. “Locals did, in fact, turn out for those first six days—we Sunday, January 28 43.6% +15.9% $132.67 +38.3% were intended for had capacity crowds at our concerts each night,” says Mokros. “Over Thursday, February 1 78.9% +59.6% $254.45 +145.7% locals, and the final the course of the 10-day celebration, we hosted more than 1.05 million Friday, February 2 89.4% +72.4% $344.59 +259.2% four days, which is visitors on Nicollet Mall.” Further economic impact details, Montag Saturday, February 3 94.7% +70.6% $357.96 +266.4% when the game-goers adds, are set to arrive this spring from Rockport Analytics. Sunday, February 4 93.2% +184.1% $360.23 +276.8%

STR arrived.” —Sam Schaust

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10 TWIN CITIES BUSINESS tcbmag.com APRIL 2018 Reuniting Camera In the last 13 years, Polaroid has changed Polaroid’s shares. The Pohlads acquired 81 years after its founding, despite two hands three times, but the company’s majority ownership in 2014 for $70 million. bankruptcies, a few patent battles and With Film headquarters have remained in Minnetonka. “The buyer wanted total control of a series of ownership changes. Annual Three years after acquiring a Now, after the recent ownership change, the brand,” says Jann Ozzello Wilcox, revenue from Polaroid-branded products majority stake in Polaroid, the there are no Minnesota investors involved in chief investment officer of Pohlad-owned sold worldwide was noted to be around $600 Pohlads sell their shares. the company. Marquette Cos. “The buyer had previously million in 2016 by Middle Market Growth. In May 2017, 100 percent acquired Polaroid’s film rights and wanted Hoping to capitalize on instant of Polaroid’s shares were to marry the iconic film with the brand. We photography’s resurgence, the investors acquired by a group of investors decided it was the best decision for the are taking the company back to its roots led by Polish businessman company long term.” with Polaroid Originals, a brand launched Wiaczeslaw Smolokowski. “It was important to us that the in September, dedicated to revamping the That same group owned headquarters remained here,” Ozzello Wilcox classic cameras and film. the Impossible Project, said in a prepared statement, “and that It released its first instant camera at the a company created in management and employees not only retain, brand’s launch, called the OneStep 2; it’s 2008 that purchased the but expand their roles with the new owner’s modeled after the OneStep camera Polaroid last remaining Polaroid exciting plans for the brand’s future.” released in 1977. The rereleased camera factory in pursuit of It’s not clear how many employees was a big deal, as it had been almost a keeping “instant film” remain at Polaroid’s Minnetonka office or decade since Polaroid stopped producing alive. how much the company was acquired instant film and cameras. Prior to the for. Polaroid did not respond to interview Leading the brand is Smolokowski’s sale, the Pohlad requests. In 2014, the Star Tribune son Oskar, who was previously CEO of the family, who own reported that there were fewer than 25 Impossible Project, which was phased out the Minnesota Twins, employees in Minnetonka. with the launch of Polaroid Originals. controlled a majority (about 65 percent) of Still, the brand remains intact nearly —Kate LeRette

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APRIL 2018 tcbmag.com TWIN CITIES BUSINESS 11 BUSINESS LIVING THE MONTH’S BEST CHOICES FOR VIP GUESTS, NETWORKING AND ENTERTAINMENT

hen T.S. Eliot famously declared April to be the cruelest month, he’d CONCIERGE April Flowers clearly never experienced March in Minnesota, a challenging tug-of-war April at Last between winter and not-winter. Here in the Twin Cities, April is a genial Enjoy a fragrant whiff of snowbird of a month. After wintering in Scottsdale, Santa Barbara or spring at these colorful Sanibel, April is happy to return home, bringing baseball games, film festivals and other annual local events. events for entertaining clients and colleagues. —Melinda Nelson Spring is in the Air, Minnesota United through April 8, Galleria, galleriaedina.com If your clients are soccer fans, invite them to choose between Minnesota United FC versus Atlanta United FC on April Fool’s Day or vs. the Houston Dynamo on April 28. On your way to Dinkytown, Bachman’s Spring swing past MN United’s new home, Allianz Field in St. Paul, scheduled to be finished in 2019. Stop Ideas House, by Beacon Public House (graduatehotels.com) for a bottle of Grain Belt Premium and Ellsworth Bachman’s on Lyndale, Cooperative Creamery cheese curds before heading over to TCF Bank Stadium, Minnesota through April 15, United’s interim home pitch. mnufc.com bachmans.com Minnesota Twins Como Park Zoo & If your clients love baseball, indulge them with tickets to the Minnesota Twins’ home opening series Conservatory Spring against the Seattle Mariners at Target Field. For a memorable, only-in-Minnesota experience, Flower Show, book seats on the home plate terrace next to the organist and treat them to 4 Bells’ signature St. Paul, through April shrimp boil, Kramarczuk’s Polish sausage and other local specialties washed down with cans of 22, comozoocon- Wonderstuff pilsner from Bauhaus Brew Labs.April 5-8, mlb.com/twins servatory.org Minneapolis St. Paul International Film Festival Art in Bloom, Clients who are film buffs will appreciate a platinum pass with VIP access to more than Minneapolis 250 films, parties and panels at the 37th annual Minneapolis St. Paul International Institute of Arts, Film Festival at St. Anthony Main. Get a head start on the celeb-spotting with April 26-29, artsmia.org margaritas and nachos on the patio at Wilde Café & Spirits (wildecafe.com)

and then join the throngs of auteurs and aficionados at the St. Anthony Main Minnesota Landscape Theatre.April 12-28, mspfilm.org Arboretum walks and Saint Paul Art Crawl workshops, Chaska, various dates, If your out-of-town clients appreciate art, invite them to the Saint Paul Art Crawl, a arboretum.umn.edu local tradition since 1977. Spend the day among painters, sculptors, furniture makers, glass blowers and other artists in historic loft studios and other creative outposts in Lowertown and other neighborhoods. Celebrate your acquisitions with craft beer and Saint Paul Art Crawl pretzels at Waldmann Brewery and Wurstery (waldmannbrewery.com), an 1857 saloon at the foot of the Smith Avenue High Bridge. April 27-29, saintpaulartcrawl.org

12 TWIN CITIES BUSINESS tcbmag.com APRIL 2018

BUSINESS LIVING | PLUGGED IN

TCB’s Women Twins Welcome Home Luncheon in Leadership Forum Kick off the new baseball season in style at this annual event com- Join women and men from prised of appearances from Minnesota Twins players, an interview across the Twin Cities who with team manager Paul Molitor, a silent auction and more. A por- support efforts to increase tion of the proceeds will benefit the Twins Community Fund.11:30

April gender diversity in business a.m., $80, Target Field, 612-370-9100, mplschamber.com leadership. Panelists who’ll discuss this important issue are: Kweilin Ellingrud of McKinsey & Co.; Andrew Hard Hat & Black Tie Gala Humphrey of Faegre Baker Rock your best wall-builder-meets-Wall- Daniels; Cindy Kent of 3M; Streeter look at the Twin Cities Habitat for and Beth Wozniak of Pentair. Humanity’s annual event. Proceeds go toward 11 a.m., $75, Hyatt Regency, Evolution of Our Workforce building affordable homes for families in need. Minneapolis, 612-336-9288 The University of Minnesota presents this annual confer- The gala includes cocktails, dinner, silent and tcbmag.com/wlf18 ence, which provides information and discussions on the live auctions and live music. 6 p.m., $85 to latest trends, challenges and opportunities in the field of $175, The Minneapolis Depot, 612-305-7108, human resources and labor relations. Attracting more than tchabitat.org/2018hhbt 300 attendees from within the school and nation, it features speakers, presentations and networking opportunities. 8 a.m., $30 to $250, Carlson School of Management, Minneapolis, 612-626-9748, carlsonschool.umn.edu —Amanda Ostuni

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14 TWIN CITIES BUSINESS tcbmag.com APRIL 2018

BUSINESS LIVING | BEYOND THESE PAGES

JOIN YWCA MINNEAPOLIS IN OUR STAND FOR A FULLY INCLUSIVE COMMUNITY. ADAM BETTCHER PHOTOGRAPHY ADAM BETTCHER Commercial Real Estate Forum Join Twin Cities Business on May 3 at the Loews Minneapolis Hotel for a discussion Together we empower girls and youth, women and their families about the local commercial real estate landscape. Five industry leaders will share how inclusive of all cultural backgrounds. WE WELCOME ALL. they’re thriving in a rapidly changing market, with rising land and construction costs, higher interest rates, rising retail bankruptcies and the battle of higher density versus For over 125 years, we have been on a mission to: NIMBY. Panelists are Spencer Finseth, principal, Greiner Construction; Michael • Advance Diversity and Inclusion Hille, executive vice president, Kraus-Anderson Realty Co.; Mike Ohmes, managing • Further Race and Gender Equity principal, Cushman & Wakefield;Matt Rauenhorst, vice president of real estate de- • Create Leaders velopment, Opus Development Co.; and Bob Solfelt, senior vice president, Mortenson • Improve Health and Well-being Development. • Welcome Everyone

GIVE. HELP ELIMINATE RACISM. GET INVOLVED. ywcampls.org/get_involved

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16 TWIN CITIES BUSINESS tcbmag.com APRIL 2018 THE INNOVATIVE, FAST-PACED WORLD OF EMERGING BUSINESSES. | BY KATE LERETTE

Can They Do It? hen Jennifer Pennington, her husband, Chris, and their friends Christi Atkinson Financial News and Rob Clapp opened their indoor mini golf course last January, business Yes They Can! exploded. The four had to quickly double their staff size to keep up with the crowds. Bind, a Minneapolis- Just over a year since opening, A little over a year since opening, their employee count is up to 75 and they are based on-demand health insurance Can Can Wonderland has preparing for a $1 million expansion. startup, closed on a doubled its staff size and is Located in a historic St. Paul warehouse once home to the American Can Co., Can Can preparing for a big expansion. $60 million round of Wonderland is much more than a mini golf course. The indoor space includes a restaurant, two bars funding, which it will (one for ice cream concoctions and one for eccentric cocktails), two stages for live performances use to expand into new and what Jennifer Pennington calls the “Boardwalk of Amusements,” which includes vintage arcade markets and ramp up games, Ping-Pong and foosball. hiring efforts. Can Can currently has about 19,000 square feet of space open to the public, and the expansion is expected to add about another 10,000 square feet, says Pennington. A self-service tap beer Oak Park Heights-based Pops! Diabetes Care, Company: wall, a third bar, three private event spaces, additional seating, and nursing rooms for mothers are whose flagship product all part of the expansion plan. The private event space is an important amenity for Can Can, given Can Can is a blood glucose meter Wonderland the high demand for such events. That demand is one reason the facility is only open to the public that attaches to the back Thursday through Sunday—it’s also open only to those 21 or older after 9 p.m. of a cell phone case and Launched: Eventually, Pennington and her team want to expand to the rooftop and add an outdoor mini syncs with the compa- 2017 golf course. “I don’t think we will ever be done,” she says; she views the facility as a community ny’s app via Bluetooth, gathering space. “I want to create a place for everyone, where everyone feels welcome.” secured $2 million from 22 investors in its latest Location: What’s more, Can Can Wonderland is the first arts-based public benefit corporation in funding round. St. Paul Minnesota. “Our social purpose is to be an economic engine for the arts,” says Pennington. The 18- hole golf course was designed and fabricated by 56 local artists and includes two holes designed by Kaleidoscope, a Min- Industry: a few seventh-grade boys. Can Can also brings in about 40 artists a week to lead several art-related neapolis-based digital Entertainment programs such as improv, karaoke and tap dancing. matchmaking scholar- The idea for Can Can stemmed from many different inspirations, including Atkinson’s ship service, closed on involvement developing the Walker Art Center’s popular artist-inspired mini golf and the a $1.3 million equity Penningtons’ passion to engage people in the arts in an interactive way. funding round. “Mini golf attracts every demographic,” says Pennington. “Some people might not come for the SpineThera, a Plym- art, but they might outh-based company stumble upon it and developing an injectable become interested.” drug aimed at treating Whether it’s lower back pain, has the mini golf, the received more than $2 art, the food or a million from investors, combination, Can pushing it near the halfway mark of a $5 Can continues to million funding round it stay busy. This year, kicked off in February. Pennington predicts revenue will reach Can Can Wonderland offers several $4.5 million. arts programs (above) in addition to its artist-designed mini golf course (right).

APRIL 2018 tcbmag.com TWIN CITIES BUSINESS 17 Baby Steps In March 2016, Margi Scott found herself up to 12 weeks of unpaid, job-protected leave in a scary situation. About seven months into for family or medical-related reasons. her third pregnancy, she learned that she was In fact, the United States is the only suffering from liver failure and underwent industrialized country that doesn’t require Is your an emergency C-section. Her twins were paid time off for new parents. “It’s a maternal delivered five-and-a-half weeks early, leaving health crisis,” says Scott, adding that 25 business Company: Scott with less time to save money for her percent of women go back to work within Take 12 maternity leave. 10 days of giving birth because they cannot “It was a very emotionally taxing and afford to take unpaid leave. jarring experience,” recalls Scott, who spent Determined to help other moms, Scott going Launched: the first few weeks of her maternity leave launched Take 12 early last year. The 2017 visiting her newborn twins in intensive care. company’s platform combines crowdfunding through Through her employer, Scott had access with a gift registry-like service, allowing moms Location: to short-term disability pay and qualified for 12 to raise money from friends and family to use Plymouth weeks of unpaid time off under the Family and toward their maternity leave. a growth Medical Leave Act (FMLA), ultimately leaving “It’s a crowdfunding service where moms her with a big financial gap. can register for funding in lieu of or in addition Industry: Crowdfunding After a bit of research, Scott discovered to a traditional baby registry,” explains Scott. spurt? she wasn’t alone; she found more than 2,000 “One thing that was lacking with traditional women crowdfunding their maternity leave. crowdfunding services was privacy; many She also found women were subject to criticism.” that unpaid or With Take 12, expectant moms (or someone partially paid who knows an expectant mother) can create a Our business maternity leave private registry where they can share their story is quite common and select the amount of money needed for their lenders will 1 in 4 women in the U.S. Only maternity leave. The Plymouth-based company 13 percent of also offers a public option for those who want return to work help you make American’s have to share their story publicly. “The idea behind within 10 days of access to paid that is to help raise awareness and paint a clear the jump to giving birth. family leave, picture of what unpaid leave looks like,” says the next level. says Scott, and Scott. “Changing the national conversation about only 60 percent maternity leave is really important, and one of the of U.S. workers biggest things lacking from that conversation is qualify for FMLA, why we need it to change.” a federal law that After releasing a beta version in January allows qualified 2017, Scott launched the official Take 12 website in workers to take September. In addition to its registry service, Take

Need a Hitch? Hitch Health, a local startup focused on eliminates some hurdles that underserved improving patient attendance rates for medical populations usually face, such as the need for appointments by providing free and convenient a smartphone (with the Lyft app installed) or transportation, is taking its business national credit card. through a partnership deal with ride-share Medical appointment no-shows are a Company: company Lyft. huge financial problem for hospitals across the Hitch Health The Minneapolis-based startup is backed country. With each no-show costing physicians Find out how we by Upstream Health Innovations, the innovation $200 on average and a no-show rate of up Launched: arm of Hennepin County Medical Center to 30 percent nationwide, the annual cost to are different. 2017 (HCMC) and its parent company Hennepin U.S. health care institutions is an estimated Healthcare System Inc. $150 billion, according to the Florida-based Hitch Health markets itself as the only publication Health Management Technology. Location: sunrisebanks.com non-emergency health care transportation Hitch Health’s national rollout was Minneapolis company on the market. Its patent-pending preceded by a six-month pilot phase in the software uses electronic health records to Twin Cities area. The startup partnered with Industry: identify low-income or in-need patients and Lyft to find “at-risk populations” and offer its Health Care texts them an offer for a free ride to and from service to those who had appointments at their clinic, hospital or doctor’s office. HCMC or any of the primary care clinics run By sending text messages and organizing by Hennepin Healthcare. the logistics with Lyft, Hitch Health’s service Results of the test were extremely positive,

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18 TWIN CITIES BUSINESS tcbmag.com APRIL 2018 Sponsored Content

12 offers planning resources Hiring to Build and community support through its blog and social media groups. or Grow Your Team In January, the company had 500 active Hiring new employees can be quite a challenge for they understand. Walk them through the task, ask- registries and had helped a growing business, especially for the first time. ing them to document the process, their documen- moms collectively raise Knowing who to hire, when to hire and trusting tation can confirm that they are on the same page. $11,000. Take 12 currently someone else to help run your business pose sig- In the beginning, you are the only one who knows charges 3 percent per nificant challenges to any business owner. To help your company culture and story. Explain to them transaction, a standard make this process a little easier, we spoke with the company goals, vision and values, develop a crowdfunding service Buffie Blesi, CEO of We Spark Growth, to get an relationship with them. You are beginning a jour- fee, but Scott hopes to eventually eliminate that fee. expert’s perspective. We Spark Growth works to ney and partnership, so taking the time to build She is exploring unburden business owners, offering outsourcing trust can be the difference in a great hire and a partnership opportunities for back office duties like bookkeeping and mar- bad one. with employers through keting as well as consulting and business coaching. a pilot program. “We The hiring process isn’t easy, especially not the first want to build a tool that When starting the hiring process, Blesi stresses the time. The up side, according to Blesi, is that you HR departments can use importance of knowing where your growth is going. don’t have to forge the path on your own. Trade to help their employees navigate their maternity “Looking to hire simply for immediate needs can be associations and other organizations are great leave,” says Scott. Right now risky and lead to problems down the road. Instead, resources. Ask questions, talk to other business the company is gathering look for an employee that will propel your busi - owners to get advice. Someone else has most information on additional ness forward while solving the immediate prob - likely had the same concerns and can point you in resources that expectant lems. Hire to support your company’s strengths.” the right direction. Realistically, every company moms need. It could be a For many business owners, bringing on a new will eventually make a bad hire, taking the time new revenue opportunity employee can be the most expensive decision you to make sure it’s the right time, you know where for Take 12, she says, will make, take the time to think and get it right, no you’re going, and that you have the right person because it’s a resource that could help companies with one knows your business better than you. Taking can help to avoid that pitfall. Careful planning and employee retention. the time to hire the right employee can set you up building relationships and trust will ensure that “We want to grow and for continued success and growth, in addition to you come through your growth period stronger expand in a way that helps expanding your company’s skill set. and ready to keep growing. as many moms as possible,” says Scott, “and we don’t Once you’ve outlined your growth and future, the We Spark Growth believes in the power of small want a fee to get in the way.” hiring process can begin. It may seem obvious, but businesses to create significant impact in their Blesi stressed that taking the time to screen appli- communities and the economy through partner- cants is critical. Don’t hire the first person who fits ships and collaboration. We call this Inspired2. the bill, even if they are family. This is an incredibly When owners embrace their own strengths and Hitch Health said; patients important decision for your company there is no the strength of the business model to build a team who had missed six or more need to rush into anything. Overall, when hiring that complements them, and partners with the appointments the prior an employee you need to realize that both of you team at We Spark Growth to take on the essential year all showed up for their are taking a risk on each other. Respect them and business tasks, growth is exponentially multiplied! scheduled appointments deliver the offer to hire in person. You want to Our team of experts in bookkeeping, finance, mar- during the trial period. Patients who participated be able to talk through the offer with them and keting, social media, administration and develop- in the pilot also rated their answer any questions they have. You are entering ment help remove obstacles to growth. We do what experience highly, as into a partnership, starting on the right foot from inspires us . . . You do what inspires you! For more customer satisfaction scores the hiring process will ensure smooth transitions information on how to be more inspired in your averaged 9.7 out of 10 points. in the future. business contact us at www.wesparkgrowth.com. “The success of that pilot Buffie Blesi is the CEO and Chief Inspiration Officer program affirmed that Lyft Once you’ve hired your employee there are import- at We Spark Growth and has been a business coach is the right partner,” Hitch ant steps to take from the beginning to set them to more than 150 businesses for almost 10 years. Health’s co-founder Susan Jepson said in a statement, and your company up for success. Blesi recom - “and that we have a robust, mends documentation in the beginning stages of easily scalable solution for employment. Don’t show them a task and hope patients, health systems and Sponsored by health plans.” —Sam Schaust

Sunrise Banks N.A., Member FDIC

APRIL 2018 tcbmag.com TWIN CITIES BUSINESS 19 Bringing the Ship Home One entrepreneurial company’s success story.

illy Joel, in “Uptown Girl,” sang “But maybe some- sachusetts General Hospital, Stanford University, Fairview PLANTING SEEDS day when my ship comes in, she’ll understand Health Services, Allina Health and University of Massachu- by Rajiv Tandon what kind of guy I am and then I’ll win.” Bob setts. It also launched a virtual scribe offering remotely, by BDylan and Dolly Parton sang similar sentiments. William leveraging HIPAA-compliant video conferencing. Shakespeare in The Merchant of Venice refers to a “ship com- In October, the company, with nearly 1,100 employees in ing home” to denote success. more than 40 specialties and about $20 million in sales, was Merchants risked a lot in sending out a goods-laden acquired by Florida-based ScribeAmerica, a leader in the ship. But if the ship returned home from far-off places with field. Their ship had come home. a cargo of valuables, they profited handsomely. The story, so far, lacks the role of captain. Vasylenko had The dictionary defines “opportunity” as “a favorable an entrepreneurial streak from an early age. While in college, juncture of circumstances.” However, that definition lacks he ran a small international trade business, shipping close- the depth and transformational power of its Latin roots: ob, out goods and heavy machinery between the U.S., Europe “toward” and portus, “a harbor or port.” and Asia. That was his initiation into broad management, as Ob portus denoted the favorable combi- well as negotiations and compliance. nation of wind, current and tide for the Elite’s competitors were focused on emergency medi- captain to bring the ship to port. cine, so the company went after primary care and specialty. Yuriy Vasylenko met fellow students Specialty-specific scribe training set them apart. Still, gaining Marcin Kubiak and Dr. Cody Wend- traction was not easy. In spite of all the efforts in service landt at the University of St. Thomas. development and sales, it took almost two years to land their During their musings, the conversa- first long-term contract. It took another year before things tion turned to the many challenges started falling in place. These initial three years were difficult, in health care, specifically physicians’ filled with anxiety and self-doubt. Tenacity and perseverance increasing administrative burden which carried them through. encroached on the practice of medicine. Even with success, problems didn’t stop; they morphed. Wendlandt had been a medical scribe. Chasing orders was replaced by finding scribes to fulfill He had first-hand knowledge of the them. Scaling from just a handful of employees to more concept, as well as its challenges. than a thousand grew challenging. In the early years, it took Kubiak and Wendlandt formed Elite persuasion to attract talent, since Elite couldn’t offer much Medical Scribes in 2008, with Vasylenko more than the vision. Then it took effort to make disparate The founders of joining a year later. Their plan, worked individuals function as a cohesive unit. Early employees Elite Medical Scribes out in the St. Thomas incubator space, was to provide had to be flexible with the rapidly changing demands of the (L to R: Dr. Cody trained scribes to support clinicians. The first contract came company; some difficult decisions had to be made when the Wendlandt, Yuriy by chance when another supplier reneged on a physician fit wasn’t there. Cultural alignment needed to be strength- Vasylenko, Marcin Kubiak) built a $20 group in rural Ohio; frustrated, they reached out to Elite. ened between early employees and those who joined more million company and Wendlandt and Vasylenko seized the opportunity and that recently to fill the emerging and needed expertise and skills. then their ship “came random piece of luck became the underpinning for con- Of one hard lesson, Vasylenko notes: “Paperwork related home.” tinuous operational excellence. Their driver was the threat to due diligence is a bitch when done at the last minute.” He of being usurped by another competitor. A competitive wished he had kept it up to date throughout the journey. strategy evolved to create specific training programs for each Vasylenko’s ship has come in, and he is spending quality of several medical specialties and back it all with a process of time with his young family. Since he enjoys traveling, the family quality assurance. has visited many off-the-beaten path cities in the U.S., and he Vasylenko had taken the helm, and with Kubiak’s sales plans to follow Formula One Grand Prix circuits around the and customer care acumen, they delivered consistent and world. We are taking bets as to when he sails out again. rapid growth. The company was twice listed in the Inc. 5000 Entrepreneurs would greatly benefit by keeping in mind list of fastest-growing companies in the U.S. and recognized the origins of the word “opportunity.” The best shot at suc- as one of the leading small businesses by Twin Cities Busi- cess is to pick from among the circumstances presented to ness. The team also received a Young Entrepreneurs award us and then work diligently till the favorable winds bring the from Minnesota Business. ship home. tcbmag By 2017 the organization was considered a preeminent medical scribe company. It operated in 30-plus states, serv- Rajiv Tandon is president of the Institute for Innovators and ing such renowned health systems as Mayo Clinic, Mas- Entrepreneurs and an advocate for the future of entrepreneur- ship in Minnesota. He facilitates peer groups of Minnesota CEOs. He can be reached at [email protected].

20 TWIN CITIES BUSINESS tcbmag.com APRIL 2018 Information Trends Nonprofits Cannot Ignore People expect easy access to an array of digital information, and Minnesota nonprofits will need to ensure that mobile pathways exist.

PERFORMING n 2017 I worked on an interesting assignment with a n Personal connectivity and information consumption are group of consulting colleagues—to research and iden- moving rapidly to mobile platforms like cell phones and PHILANTHROPY tify 15-year trends that will influence the future of the other devices. Nonprofits will need to ensure that path- By Sarah Lutman IWikimedia Foundation and its family of wikis, most notably ways for information, contributions and programming Wikipedia. Wikipedia is among the world’s most-visited are optimized for mobile access. Already widely evident, websites. Those involved, primarily volunteers, believe in this trend will accelerate in the next 15 years, with some the vision of the movement “to imagine a world in which researchers predicting a seven-fold increase in global every single human being can freely share in the sum of all mobile traffic in the next five years alone. knowledge.” n Misinformation, censorship and the emergence of Our summary report is available online: Strategy 2030, nefarious cyber-campaigns will be an ever-growing Wikimedia’s role in shaping the future of the information concern. Researchers expect increasing sophistication commons (bit.ly/2EehRjl). Longer research briefs are posted in cyber-warfare, coupled with efforts by some govern- on Wikimedia’s open-to-all strategy ments to limit access to information on global platforms. page in a series of six entries and These battles will intensify in the U.S. and around the related comments and discussion world. Nonprofits need to protect themselves and their from readers. participants from these assaults and provide havens for Completing this project was a trustworthy, secure connections and information. learning experience on a number of n Even while some governments limit access to global plat- levels. First was learning the citation forms and information sources, there is a strong trend protocol and mindset of Wikipe- toward free and open access to knowledge. Organiza- dia contributors and editors, and tions like libraries, museums and archives are increas- understanding Wikipedia’s context ingly making their materials and collections available for and process for declaring anything to free and working to make them searchable and easy to be a fact. Wikipedia editors will sniff learn from and use. Nonprofits whose collections and out any instances in which some- programs are cumbersome to access, or available only thing is stated as true and look for the behind paywalls, will encounter the ethos of the open relevant citation(s) that back up any knowledge movement and be forced to consider ways and all assertions. “Citation needed” is an exacting disci- to participate. For people with internet access, this trend pline; writers have to provide their sources as they submit will result in many more ways to engage with informa- wiki entries. And, for Wikipedia editors, all citations are not tion, objects and ideas online. created equal. Editors are looking for high-quality citations, n Media and digital literacy will become critical to citizen- ones that are themselves verifiable. ship, and efforts will increase to teach these skills begin- Within the research itself, specific findings are broadly ning in early childhood. Not only will the public need to applicable to the nonprofit sector. We focused on five re- know the three Rs, but also how to navigate the devices, search topics and added a sixth as a reflection on what we’d platforms and processes that deliver educational content. learned. We looked at trends in demographics, technology, Our team’s final essay explores the difficulties—if not information, access and literacy. Here are six takeaways likely the futility—in predicting the future by examining trends. to resonate: No amount of trend-spotting and analysis can secure n In the next 15 years, the world’s population is expected organizations against the rising tide of unexpected events. to increase most rapidly in Africa, while Europe’s Instead, we can look to artists to help us imagine new population is predicted to decline. Globally, low-income possibilities, consider new realities and learn to expect the populations will grow much faster than middle- and unexpected. Organizations with nimble structures, and high-income segments, and urban growth will outpace ones that listen, learn and evolve constantly, will be best able rural. Global nonprofits will need to find effective ways to adapt and thrive, whatever the future holds. Speculative to help address and bridge gaps in economic opportu- fiction and scenario planning offer alternatives to traditional nity. While this trend has obvious ramifications for a trend research and may be best able to help us imagine a global platform like Wikipedia, it also resonates within better future. tcbmag the U.S., where education and opportunity gaps have widened, and access to information and education are Sarah Lutman is a St. Paul-based independent consultant seen as keys to economic mobility. and writer for clients in the cultural, media and philan- thropic sectors.

APRIL 2018 tcbmag.com TWIN CITIES BUSINESS 21 THE LATEST DISCOVERIES FROM PROVIDERS, PRODUCT DEVELOPERS AND PAYERS. | EDITED BY KATE LERETTE

he Masonic Cancer Center at the University of Minnesota is leading a clinical charge to unleash New Technology Health Care a Top Enhances “natural killer” cells against blood cancers with the aid of a new technology that has shown its ability Issue in America to enhance the cells’ numbers and effectiveness. Anti-Cancer Cells Health care is the most Jerusalem-based Gamida Cell Ltd., a startup backed by the Swiss pharma giant Novartis, is critical issue facing the partnering with the U of M on a Phase I study of how patients with relapsed or refractory non- U.S., at least to workers Hodgkin lymphoma or multiple myeloma fare under a treatment with natural killer (NK) cells that surveyed by the Em- have been enhanced through NAM technology. ployee Benefit Research Short for nicotinamide, NAM is a small molecule that Gamida harnesses to increase the number Institute (EBRI) and Gre- enwald & Associates, a and effectiveness of donated NK cells. When infused into non-Hodgkin lymphoma and multiple Washington-based market myeloma patients, NK cells have shown the ability to attack tumors and bolster the body’s natural research firm. immune defenses against cancer. The findings of their Using NK cells as anti-cancer agents has been previously studied, but there have been two major 2017 Health and Workplace drawbacks: an insufficient supply of NK donor cells, and their short lifespan once infused into a patient. Benefits Survey were Gamida Cell is addressing this problem by using NAM to expand the numbers of NK cells 100- released on Jan. 25, five fold while also improving their functionality. days before Amazon, The U of M study will be led by Dr. Veronika Bachanova, a hematologist/oncologist who Berkshire Hathaway and JPMorgan Chase an- specializes in stem cell transplantation to fight blood cancers. The overarching goal is to determine nounced that they intend the maximum tolerated dose of NAM-NK cells. to form a joint company to “There is significant need for novel therapeutic approaches for refractory non-Hodgkin provide “simplified, high- lymphoma and multiple myeloma, which are aggressive malignancies with limited treatment options,” quality and transparent Bachanova said in a statement. health care at a reason- Pre-clinical studies in animals have shown that NK cells produced by Gamida’s NAM technology able cost.” displayed “superior in vivo lifespan, proliferation and infiltration into multiple organs, including bone Some 31 percent of marrow.” The expanded NK cells also produced more CD62L (L-selectin), a “homing receptor” that the 1,518 working adults surveyed cited health care recruits other immune cells into attacking cancer tumors, thus amplifying their effect.—Don Jacobson as the top issue in the U.S., followed by: n Terrorism (21 percent) n Role of the federal Biotech Incubator Proposes Expansion government (15 percent) A state-of-the-art laboratory facility and business incubator serving Minnesota and the City of St. Paul with a goal to develop the Twin Cities into n Unemployment/jobs (13 medical and biotechnology startups in St. Paul is expanding, according to a national biotech hotbed. The $24 million project was strongly backed by percent) plans filed with the city. Robert Elde, then dean of the University of Minnesota’s College of Biological n Education (9 percent) Documents submitted to the city’s Department of Planning and Sciences, who recognized a need for U of M biotech commercialization n Immigration (7 percent) Economic Development indicate that the nonprofit is planning an spinoffs to have access to lab facilities similar to those at the U. nTaxes (5 percent) 18,000-square-foot addition onto its existing 125,000-square-foot building The effort was also championed by former St. Paul Mayor Randy Kelly, Workers’ lack of faith in St. Paul’s Midway neighborhood. who prodded the City Council into buying the vacant former Target Corp. in the health care system If approved by its board of directors, the $6 million expansion would largely was due to the warehouse at the Westgate Industrial Park, allowing the project to proceed. be a major milestone for University Enterprise Laboratories (UEL), which system’s lack of afford- UEL’s current tenants include U of M spinoff CoreBiome Inc., which recently houses more than 35 startups and a common lab space. ability. Some 37 percent of Elevations prepared by Alliiance, a Minneapolis-based architecture firm, emerged as a new player in the burgeoning field of microbiome-related the respondents said they show a single-story addition featuring expansive windows fitted with “low research and development, and Prism Clinical Research, which specializes in were not confident in their emissivity’” glass, a type of coated glass designed to improve energy efficiency. the execution and management of early-phase clinical studies. ability to afford health care UEL was founded in 2003 as a partnership between the University of —Don Jacobson services without financial hardship. —David Burda

22 TWIN CITIES BUSINESS tcbmag.com APRIL 2018 Health Care System Is Starting to Show Its Cracks It probably was the flu, but the escalating rhetoric and calls to action feel different.

EXPLANATION es, health care costs a lot. And you don’t always get generic drug company (bit.ly/2mVcPhx). The players are good service or results. An unexpected spike in Ascension, Intermountain Healthcare, SSM Health and OF BENEFITS blood pressure—likely caused by a viral infec- Trinity Health. The systems said the company will be an By David Burda Ytion—sent me to the emergency room in January where I FDA-approved manufacturer that will make generic drugs waited six hours to be told I was fine. Although I still felt directly or by subcontracting with existing drug manu- crappy, I was pleased with the diagnosis. facturers. The systems attributed the unusual move to the I took a hit on my co-insurance, but I did walk out with desire to exert more control over the cost and supply of the two prescriptions (one I’ll never use) and a second portal generic medications they provide to patients. to use (whose login and password I already forgot and that A Jan. 29 report from Vizient, the Irving, Texas-based won’t share personal health information with my first por- group purchasing organization, projected that health tal, whose login and password I forgot years ago). systems like the aforementioned four will face a 7.4 percent The experience again reminded me why I loathe using increase in the prices they pay for prescription drugs from the health care system unless I feel like I’m going to drop July 1 through June 30, 2019 (bit.ly/2FzjR2c). dead any second. It’s expensive. It’s wasteful. It’s disjointed. Ever on the defensive, the Pharmaceutical Research and Like programmers writing software for themselves rather Manufacturers of America, or PhRMA, launched a new Minnesota Versus the Nation than for users, the health care system was designed for website, LetsTalkAboutCost.org, on Jan. 24 to “educate con- Per capita health care spending those who run it and work in it, not for those who use sumers” about why prescription drugs cost as much as they by commercially insured patients it (namely, patients) or pay for it (mostly employers). do (onphr.ma/2DETmvW). The site says hospitals mark up is slightly lower in Minnesota. I’m not telling you anything you don’t know prescription drug prices charged to patients by nearly 500 already. What is new is that I’m finally starting to percent. That’s a very visible split in the veneer. 2016 PER CAPITA SPENDING ON MEDICAL SERVICE see cracks in the status quo. The long-entrenched, How are insured employees coping with higher premi- stakeholder-heels-dug-in, rally-the-troops health care ums, co-payments, co-insurance levels and out-of-pocket MEDICAL system is starting to really feel the heat. medical expenses? Some 68 percent say they’re trying to NATIONALLY MINNESOTA DIFFERENCE SERVICE One crack was a 22-page report released by the take better care of themselves, according to an Employee Washington-based Health Care Cost Institute on Benefit Research Institute (EBRI) survey of 1,518 adults Inpatient Jan. 23 (bit.ly/2rtuzoN). The HCCI’s 2016 Health with employer coverage (bit.ly/2s0lXGn). That was the most $1,049 $1,066 1.6% Less care Care Cost and Utilization Report said total health frequently cited response. care spending per person rose 15 percent, to $5,407, Other responses, according to EBRI’s Health and Work- Outpatient in 2016 from $4,701 in 2012. HCCI attributed the place Benefits Survey released Jan. 25, are: $1,507 $1,386 8% More care increase “almost entirely” to higher prices rather n Choosing generic drugs more often (63 percent). than increased use of services. The HCCI’s figures n Going to the doctor only for more serious conditions or Professional are based on 4 billion claims from 40 million people symptoms (63 percent). $1,820 $2,235 22.8% More services who have employer-sponsored health insurance n Talking to the doctor more carefully about treatment from four carriers. options and costs (56 percent). Prescription $1,030 $683 33.7% Less drugs Over that five-year period, prices for prescription n And my favorite, delaying going to the doctor (55 per- drugs rose 27.2 percent, followed by a 17.1 percent cent). Total $5,407 $5,371 0.6% Less jump for outpatient care, an 11.2 percent hike for Less popular ways to deal with higher health care costs are: SOURCE: HEALTH CARE COST INSTITUTE SOURCE: HEALTH professional services like physician office visits, and an n Looking for cheaper health care providers (34 percent). 8.3 percent price increase for inpatient hospital care. n Not filling prescriptions or skipping medication doses A fissure came a week later, on Jan. 30, when Amazon, (33 percent). Berkshire Hathaway and JPMorgan Chase announced plans n Looking for cheaper health insurance (32 percent). to launch a new company whose initial focus will be on Now, whether all this cracking in the status quo leads to “technology solutions that will provide U.S. employees and fundamental changes in the way health care is delivered and their families with simplified, high-quality and transpar- financed in the U.S. remains to be seen. But it’s pretty clear ent health care at a reasonable cost.” (bit.ly/2DUklUf) that I wasn’t the only person whose blood pressure spiked in There’s been a lot of speculation about what exactly the January. tcbmag new company will do—and whether the new company will have any impact at all. But the mere fact that three heavy- David Burda (twitter.com/@davidrburda, dburda@msp-c. hitters called rising health care costs “a hungry tapeworm com) is editorial director, health care strategies, for MSP-C, on the American economy” sent a lot of health care CEOs where he serves as the chief health care content strategist and scrambling to look at their strategic plans and traditional health care subject matter expert. business models. Another crack appeared Jan. 18, when four big not-for- profit health systems announced plans to create their own

APRIL 2018 tcbmag.com TWIN CITIES BUSINESS 23 Giving Up The Reins Succession planning includes not only mentoring the next generation, but also a good exit strategy for the founder.

IT’S ALL RELATIVE echanical engineer John tions of the company and its manufactur- Natalie were smart, caring people who By Tom Hubler Miller (not his real name) ing process. But his son was the only real did not want their grandchildren cor- started his business in a candidate to keep the business in the fam- rupted by the family wealth. This was a Mgarage, invented several machines for the ily; neither of John’s two adult daughters complex mix of business concerns, family packaging industry and built his dream nor their spouses were interested. concerns, even concerns about success. into a $40 million company. That’s not John and his wife, Natalie, realized And not unusual. an unusual start when you realize that they had a dilemma about succession, Given these facts, what would you do? Amazon, Apple, Disney, Google, Harley maintaining family harmony and treat- With facilitation from a family busi- Davidson, Mattel and Hewlett-Packard, ing their adult children equally. This also ness advisor, a family business planning to name a few, also started in a garage. is not unusual. In fact, it’s a huge source meeting was held. The family worked As the company matured, John grew of concern for business families, which together to establish a plan for what to worried about continuing its growth. often need outside help. do. This included having John hire an John’s son, Ken, did a great job in sales They wanted an overall plan to interim president to run the company and marketing for the business, but as manage these concerns. They also were and train Ken to take over the business. time went by, John didn’t think his son worried about their 10 grandchildren But after 18 months, John was disap- would be ready to take over as the leader. (from 4 to 17 years old), because the pointed with both the interim president’s He felt Ken needed more experience and third generation could come to feel “en- leadership and the company’s perfor- understanding about the financial func- titled” by their financial success. John and mance. He searched again and hired a

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24 TWIN CITIES BUSINESS tcbmag.com APRIL 2018 former employee children and a point on the agenda. work, connecting with their family and who returned to grandchildren When they reached that item, the grandchildren, leisure time, service and become president could develop president looked at John and said, “If philanthropy. It included how much time of the company. a plan for their I’m going to be successful around here, they wanted for travel, their commitment It was the right financial well- you can’t be here as much.” John felt like to the local community foundation, and move. In less than a being. The meet- someone had grabbed him in the throat, building a legacy with their grandchil- year, sales and prof- ings included but he thought to himself, “I’ll be fine. dren. Setting priorities was a great relief itability increased. age-appropriate I’ve got a boat on Lake Michigan and I’ve that took the family into the future. Equally important, discussions with got a hobby farm. I’ll be fine.” He didn’t The Millers’ succession plan genu- the new president the grandchil- say anything, and they committed to inely demonstrated their commitment developed a great dren so they continue the regular meetings. to their values and the importance they mentoring relation- could develop a A few months later, John’s work sched- placed on their family relationships. John ship with Ken, who sense of gratitude ule was again on the agenda. It was the last and Natalie were able to see their hard had begun to blos- for their bless- item. When they reached it, John said, “I’m work pay off as their company contin- som as a potential ings. As part of really doing a good job on this, aren’t I?” ued to grow, and their family members leader. those discussions “No, you’re not,” said the president, strengthened their close ties. Meanwhile, each person was shaking his head slowly. John looked As a part of the succession planning based on a consult- helped to develop crushed. process, Ken has now assumed the presi- ing recommendation, John worked with purpose statements about their lives. Of- “I want to do it, I know I have to do dency of the company and is doing an his attorney and accountant to create an tentimes these personal statements help it, but it was the hardest thing I’ve ever exceptional job leading and growing the estate plan that treated his adult children people of any age to create happiness and done,” John said. This, too, is not unusual. company. Successful pathways like this equally. In simple terms, the plan allowed a fulfilled life. One of the most painful decisions for often require that entrepreneurs learn Ken to inherit the business and use the Throughout the year, the new presi- an entrepreneur is to separate from the to loosen and, eventually, hand over the estate’s assets to create an equitable distri- dent and Ken were doing well. The presi- company he or she started. reins. tcbmag bution among the three adult children. dent met regularly to make sure John Family business advisors often assist To prevent entitlement from affect- supported and understood the changes people in transitioning to new life roles. Tom Hubler ([email protected]) ing the third generation, there were a he was making in the company. At one of John and Natalie developed a life career is president of Hubler for Business Families, number of family meetings so the adult those meetings, John’s work schedule was plan. It encompassed direction for their a family business consulting firm.

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APRIL 2018 tcbmag.com TWIN CITIES BUSINESS 25 Women hold just a fraction of the top executive jobs in public corporations. While the path to gender parity appears long, key women executives share their prescriptions for accelerating progress.

By Liz Fedor

26 TWIN CITIES BUSINESS tcbmag.com APRIL 2018 s s gender equality in corporate reported that women held 5.2 percent of CEO leadership a pipe dream? positions in 2017. If you look exclusively at Twin Cities Business, which has been closely national and Minnesota data, examining gender parity issues since 2012, re- you might answer yes. cently interviewed two Minnesota women who In 2017, women occupied have broken through the glass ceiling. They 20.4 percent of the executive shared how they succeeded and the actions need- officer roles at 72 public com- ed to expand the ranks of women in C-suites. Women hold only one in five panies in Minnesota, accord- Beth Wozniak is senior vice president and C-suite ing to an annual St. Catherine president of electrical at Pentair. In a few weeks, positions in U.S. University study. the electrical division will be spun off into a new corporations. McKinsey & Co. and public company called nVent. Wozniak will be LeanIn.Org found that women CEO of nVent, which will be Minnesota-based held 20 percent of the C-suite and expected to generate more than $2 billion in home in on high performance, and I think it jobs in their national study, annual revenue. enriches the workplaces,” Camille Chang Gilm- Women in the Workplace 2017. Vicki Holt has been president and CEO of ore tells TCB. She is the global chief diversity These aren’t the kind of Protolabs, also a public company, since early 2014. officer for Boston Scientific. Chang Gilmore, numbers that Sheryl Sandberg, Wozniak and Holt pursued academic paths primarily based in Maple Grove, also serves Facebook COO, was anticipat- that have served them well in their leadership as vice president of human resources for the ing in 2013 when her landmark roles. Before they each earned MBAs, they had interventional cardiology business. book Lean In was published. STEM majors as undergraduates. Wozniak’s As a black woman, Chang Gilmore also is She became a national advocate bachelor’s degree is in engineering physics, while aware of the paucity of women of color in C- for gender parity. Holt’s is in chemistry. suites. The McKinsey study showed that women But in an Octo- They also participated in the same activity of color hold about 17 percent of entry-level ber commentary as students, which helped build their confidence jobs in U.S. corporations, but only 3 percent of in the Wall Street Journal, Sandberg and Lean and discipline, and their competitive natures. C-suite jobs. Their male counterparts of color In president Rachel Thomas wrote, “Progress Wozniak and Holt were both swimmers in high occupy about 12 percent of C-suite positions. At toward equality in the workplace continues to be school, and Holt also was on the swim team at Boston Scientific, three of the 10 board members slow—and may even be stalling.” Duke University. are women, including two black women. Nationally and in Minnesota, the portion In a 2015 study, EY reported: “Athletes figure Wozniak, Holt and Chang Gilmore told TCB of women holding key executive roles has been prominently among the women who have that many strategies are needed to attract, retain increasing at a rate of less than 1 percentage point broken through the glass ceiling. Ninety-four and promote women to top executive jobs. The a year. In 2012, the McKinsey study showed that percent of women in the C-suite played sports, following are reports on the individual inter- women held 16 percent of C-suite positions, 52 percent at a university level. Executive women views conducted with the women leaders. These while the St. Catherine study indicated Minne- are more likely to have played a sport and to hire excerpts have been edited for length and clarity. sota women occupied 17.4 percent of executive other women who also played.” officer roles in 100 public companies. While some women may view gender parity At S&P 500 companies, Catalyst Inc. as a fairness issue, many men and women view it as a business imperative. “Having diverse teams enables us to

APRIL 2018 tcbmag.com TWIN CITIES BUSINESS 27 Beth Wozniak, Pentair Senior vice president, president of electrical

On April 30, Wozniak will become CEO of nVent, a public company that is a spinoff Q: You are about to become CEO of nVent, and your leadership team of nine from Pentair. Its projected revenue is more than $2 billion annually. executives includes three women. As one of the few women CEOs of public companies in the U.S., what will be important in the nVent culture to ensure that Q: Where were you raised, and what did you enjoy doing in high school? other talented women build careers at nVent? A: I grew up in southern Ontario. My father was a banker. My mother did part-time A: We’ll build upon Pentair’s “Win Right” culture. We want to win, but we want to do jobs and was a bookkeeper. I loved math and science, which is what led me to go into an it in the right way, with integrity, respect and teamwork. You can develop a more diverse engineering discipline. I was a competitive swimmer in high school. I also had part-time organization when you have diverse leaders. People early in their career want to be able jobs, working to save up money to go to college. to look up and see people who look like them, to know that they can aspire to those positions. For me it means encouraging and having programs in place that ask the ques- Q: How did earning a bachelor’s degree in engineering tions: Are we developing diverse talent? Do we have networking activities? It’s very physics—a STEM field—put you in a strong position to powerful for women to get to know one another whom you might not know across succeed in business? the business, because those relationships can help you when you come across a problem or when you want to bounce an idea off a colleague. A: If you work hard and you have the aptitude for it, and you have the ability to work with different people, Q: What do you think are the major barriers preventing more anyone can succeed after coming out with a STEM women from making it to the top of corporations? degree. As a professional, you need to ensure that you as an individual can adapt to whatever work A: Sometimes women and minorities lack confidence. When I inter- environment there is. That’s true if you are a man view candidates for roles, I’ll always ask them what their career ambition or a woman. is. Typically, men will say, “Well, I want to be the CEO or president or chief financial officer.” I’ll find that women will think just about the current Q: You were at Honeywell for about 25 position that they are aspiring toward. They don’t often think bigger. years. Why was it a good place for a woman Or even if that is what they want to do, they think they shouldn’t engineer? say it. We need to ensure that women feel they have the confidence and the ability to express what they want to do, their ambition, A: I had the opportunity to work in three without feeling that that’s received negatively. different countries. So I eventually left Canada From a leadership standpoint, we need to continue to make and moved first to Phoenix. I also had the op- diversity high on the talent agenda. It’s important that diver- portunity to live in London. What I liked about sity and promotion of women isn’t seen as a women’s issue, Honeywell is that it gave me the opportunity but as a business issue—and that men also realize the role to work in different businesses, countries and that they play in ensuring that they’ve got an environ- functional assignments. As a leader, you grow when ment or that they are networking or creating opportuni- you put yourself into new experiences and you get ties for all employees. We also need to have flexibility new cycles of learning. I spent half of my career with in our work environments. Honeywell on the aerospace side and I spent half of my career in automation and control solutions. There Q: In recent months, several men in leadership was a great culture within Honeywell that had good roles have stepped down over sexual harassment values. allegations. How do you think sexual harassment has affected women’s ability to advance in their Q: Was there anything that was particularly careers? helpful in advancing your career at Honeywell? A: I have a couple of leadership philosophies. One of my sayings A: To get promoted in a company like Honeywell, is “You get what you tolerate.” If a company tolerates bad behavior, you have to get results. I always tend to be a very goal- they can quickly let these situations arise. If we are a company that oriented person, and so delivering on the results— has respect and teamwork, we need to ensure that everyone is living completing engineering tasks for customers or doing up to those values. project management—puts you in a position to be looked at for new opportunities. I was asked if I would be interested in taking on a leadership role that was different from what I had pursued in very technical roles. The way I thought about it is that you always grew and developed the most when you took on new assignments outside of your comfort zone.

28 TWIN CITIES BUSINESS tcbmag.com APRIL 2018 Camille Chang Gilmore, Boston Scientific Vice president of human resources for interventional cardiology, Global chief diversity officer

In 2014, Chang Gilmore took on added Q: What actions are needed to increase responsibilities to lead the company’s global the portion of women at the top of U.S. diversity strategy initiatives. She is Jamaican corporations? Chinese, was raised in New York, and spends much of her Boston Scientific time at the A: It is educating the men in leadership company’s Maple Grove offices. on the value of having diverse and powerful teams. One of the things that Mike Mahoney, Q: Studies show that women hold only Boston Scientific’s CEO, has done so well is one in five C-suite positions in U.S. cor- showing the importance of leading by ex- porations. What do you think is holding ample. He just hired his senior vice president, women back from securing the top jobs? corporate counsel and corporate secretary Desiree Ralls-Morrison, who is a black female. A: Having diverse teams enables us to home He is saying the key for us is making sure in on high performance and it enriches the women have mentors and resources available workplace, it spurs innovation and it strength- and feel support early on in their careers, so ens relationships with customers. One of the they can move into the pipeline and aspire to obstacles for women that I’ve seen is how they the levels we want them to achieve. are showing up in the workforce, how they are taking their seat at the table and really Q: Boston Scientific’s executive commit- even walking in their own value. It is really tee has 16 members, including two women. important that they recognize that they have That is 12.5 percent. Please elaborate on influence, and their value shows up in a very the corporation’s goals for gender diver- different way than that of our male counter- sity. parts. It is understanding the value you bring to those meetings, to those conversations and A: Our CEO recognizes that it is going to demonstrating some courageous leadership be accomplished over time and not overnight. to share your opinions and your thoughts so When we talk about the goals, it is about that you can be heard. making sure that we make year-over-year I’ve seen in some of the young women progress. We’ve had a lot of great momentum I’ve coached that they allow fear to be a mind and engagement around diversity and inclu- killer. If you stay in your mind long enough, sion. But Mike recognizes progress is not as what happens? You say nothing and do fast as he wants. It is best to move the needle nothing because you are contemplating all of with leaders if we set goals. That includes both the different scenarios. What if they react to strategies and metrics. How as a company are this? What if they say this? What we have to we going to do this? We are going to make sure recognize is when we are invited to a meeting, that we prioritize these things. So your women we have value, and people want to hear what directors and above, and your women manag- we have to say. ers and supervisors, and your women of color specifically, we want to know what progress Q: As the global chief diversity officer, what do you think are the most you are making. Do you have a diverse slate for open jobs? If you don’t, why? effective strategies for advancing women? Q: How can women of color increase their leadership numbers A: Within Boston Scientific, we make sure that we are having career conversations in corporate America? with the women in the organization, elevating the conversation beyond “What are you doing now?” but “What do you want to be doing in two to five years?” We have a A: For the women of color, it really is important to understand and walk in your own very robust succession planning program. Our women’s network is a global employee value and figure out how to transfer your value into influence. Not just influence for resource group that has mentoring circles and provides support for our women around your cause, but also to develop others and pull others up behind you. I think it is my the world. responsibility to exude excellence, because I want to make sure that the footprint and Boston Scientific was named one ofWorking Mother’s best 100 companies to work impression that I leave results in another woman of color behind me being seen in that for. We not only increased our maternity and paternity benefits, but we also created a light. Leadership is really understanding that people are watching you. You have to be program for new mothers. When they are traveling, we pay for the shipment of their extraordinary. Look at women like Maya Angelou, Rosa Parks and Coretta Scott King, breast milk if they are breastfeeding. We had a number of women in science, technology, whom I idolized when I was growing up. They exuded excellence and extraordinary will, engineering and math who were recently acknowledged at the Women of Color Rising making sure they were a beacon for the next generation. Stars 2017. When young women in the organization see others growing, on the podium and talking about their progression in the organization, it has a ripple effect.

PHOTOGRAPHY BY BILL BARTLETT APRIL 2018 tcbmag.com TWIN CITIES BUSINESS 29 Vicki Holt, Protolabs President and CEO

In 2014, Holt assumed the top job of the publicly traded Protolabs. Q: How did you and She previously served as CEO of Spartech Corp. your husband juggle two full-time careers? Q: How did you develop a love of chemistry? A: After he finished his A: I went to junior high and high school in South Bend, Indiana. doctorate, I followed him to I always really liked math and science. And I had an awesome chem- the Scripps Research Insti- istry teacher when I was in high school. She made it real, she made it tute in La Jolla, Calif. I was alive. My father was in business, in the bearing industry, and actually able to stay with Monsanto. was an electrical engineer. He was in commercial roles, and so we They found a great role for moved around with the company that was later bought by Ingersoll me out in California and we Rand. did that until I had an opportunity to work directly Q: What is behind the self-confidence and the drive that you for the CEO of Monsanto. developed that allowed you to become the CEO of two compa- I tried to do that for a year, nies? commuting from San Diego to St. Louis. It was brutal. A: A lot of it does come from childhood and how you’ve been And I remember one day brought up. My parents always said you can do anything you put coming home and my your mind to. And I always felt committed to another piece of ad- daughter was really sick. I vice: Do your best and take a risk. The combination of those things got home on a Friday night gave me confidence. I was an athlete. I was a nationally ranked at about midnight and my competitive swimmer. I swam varsity at Duke. That also causes you husband opens up the door, to have quite a bit of discipline. I never really thought there was and said, “Vicki, this is not something that was out there that I would be blocked from doing. I working.” I would leave never felt there was a ceiling for what I could do. Sunday on a red-eye and I’d be gone all week and I’d Q: Why did you start work on an MBA two years after com- come back on Friday. And pleting a bachelor’s in chemistry? I had two little kids. And it just was not working. So he left a tenure-track position at Scripps and we went back to A: I felt this would give me a broader perspective on business and would prepare me St. Louis and he went back to Washington University. for other roles I’d like to have. But part of the issue was my husband was pursuing his Ph.D. at Albert Einstein School of Medicine, probably working 12 to 15 hours a day. We Q: What are some of the sacrifices you need to make to be a CEO? didn’t have kids yet. So I went back and got my MBA. A: When you talk about the challenges of women in career paths that take the kind Q: What age were you when you had children? of dedication that it takes to get to a CEO role, one of the keys is a very supportive family. You just can’t get there without it. My husband, Curt, has been incredibly support- A: I had my daughter when I was 30. We had been married eight years; my husband ive all the way through our whole life and our marriage. You can’t underestimate that and I got married right out of college. We’ve been married for 39 years in August. I had because any of these careers, for men or women, take sacrifices. And if you are going to my son two-and-a-half years later. select a path to some of these roles, the sacrifice is that you are not there for the birth- days and every game, and you just have to make choices and it’s difficult. If you don’t Q: What did you do for child care, and did you step out of your career path at have a supportive family, it’s hard to do. any point to care for your children full time? Q: What qualities do women need to become CEOs? A: I never stepped out of my career path. And for both of them, my maternity leaves were six weeks, but I worked through them. It was wild. My child care, when the kids A: It takes a degree of discipline and dedication and commitment, but you also have were younger until they went to full-time preschool, I had au pairs. It was fun. We had to love what you do. There is a passion that’s in it and it helps you work through the sac- girls from Europe come live with us. rifices you have to make. I love solving business problems and working with teams and taking a business from point A to point B. That passion for the roles that you play is a big, big part of it that allows you to put the kind of energy into making things happen in business. Women represent 50 percent of the intellect that’s out there. And I really want to see more women in leadership roles because I think they can bring a lot to the party. Not having women leaning in means we’re not getting the best of the best. tcbmag

Liz Fedor is the Trending editor of Twin Cities Business.

30 TWIN CITIES BUSINESS tcbmag.com APRIL 2018 PHOTOGRAPHY BY BILL BARTLETT How do companies champion women in leadership?

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LEARN MORE AT PATTERSONCOMPANIES.COM 17H0127 (2/17) GUEST COMMENTARY

By Linda L. Holstein re you an executive, a small business owner or an outside board member longing to post a new hashtag, #NotAtOurCompany? Does the ongoing tsunami of sexual misconduct allegations, Editor’s Note: Sexual ruined male careers, empowered women and horrifically gross harassment is among many descriptions of sexual assaults leave you longing for the good old days of early 2017 when you could count on your sexual factors that limit the number of harassment policy to protect you in court? After training your women who reach top executive managers to take seriously any and all complaints of sexual ha- jobs. Linda Holstein is a veteran rassment, are you shocked to learn that most sexual harassment allegations are never verbalized, exposed or reported for years? employment law attorney who These are the kinds of questions keeping Minnesota em- has represented companies ployers awake at night, particularly those who have faithfully invested in the latest anti-harassment prevention measures, the in disputes. She explains why most up-to-date training, the most aggressive human resources sexual harassment has persisted policies. Why hasn’t it worked? Why, if you followed the let- in workplaces and what ter of the law from the United States Supreme Court, no less, is there still rampant harassment emanating from bad actors businesses can do to reduce right in the middle of—that’s right—your workplace? or eliminate harassment. Sexual harassment laws in this and every other state are designed to protect workers from intentional discrimination based on that worker’s gender. For Minnesota companies, these laws come from the Minnesota Human Rights Act and the federal act, Title VII, and are ultimately enforced by our state and federal courts.

32 TWIN CITIES BUSINESS tcbmag.com APRIL 2018 During the last 36 years But to whom was the message (sexual harassment was first sent? Not to the next perpetrators, recognized as a legal cause of not to the employees experienc- action in Minnesota in 1982) ing harassment but not reporting those courts have struggled it, and especially not to the many to set up a framework that hardworking employees who encourages employers to try couldn’t imagine or never saw a to “remedy” a bad workplace co-worker harassing someone in situation and stop any harass- their workplace. Despite hours of ment that is sufficiently “severe mostly boring training and lec- and pervasive,” such that it tures, policy updates and endless “unreasonably interferes” with seminars, the problem of work- a worker’s job. That’s the magic place sexual harassment remains. standard. If you are an employer who The rule that governed truly wants to stop harassment every sexual harassment in your workplace, here are three case—up until now—was that practical tips to consider: the alleged victim—virtually always a female—had to prove what was happening to her was severe and pervasive, not an “isolated incident,” not just an “offensive utterance” and, “Zero tolerance” is a powerful finally, something that happened to her specifically because she was female. 1 ) This standard favored employers in court. But many employers didn’t want to risk credo in theory but not in practice. the bad publicity of a public courtroom setting, so they reached a compromise with From U.S. Sen. Kirsten Gillibrand of New York to the Secretary of the U.S. Air Force, the woman reporting the harassment “out of court,” which was, of course, confidential. the drumbeat to stamp out sexual harassment often starts with the phrase “zero toler- Moreover, the secret settlement featured a “non-disclosure agreement” preventing the fact ance.” As in: We in the U. S. Senate, or in the U.S. Air Force, or in our company will abso- of, the amount of and the participants in the very settlement itself. lutely not tolerate any form of sexual harassment, or we will immediately punish those Thus, the cycle was complete: Bad act, internal reporting, outside investigation, who harass in our workplace. “lawyering up,” legal complaint, settlement, out of sight, out of mind. The alleged victim The admirably snappy ring to the words “zero tolerance” has the added benefit of had some, or possibly a lot, of money, but no emotional vindication; the alleged harasser seemingly unquestionable clarity: if “credible” evidence exists that you have harassed, had some, or possibly a lot, of embarrassment and reputational damage, but, at least until you’re out. This line of thinking started with the misplaced notion that certain diaboli- recent months, a job to return to. cal men lurking in a number of American workplaces needed to wake up, shape up and While the harassment complaint might stay in the harasser’s personnel file for a year stop harassing. Once they were stopped, shamed or fired—weeded out, like thistles in or so, no one else in the company theoretically “knew.” Even with the small number of a garden—the next batch of thistles would know better. And workplaces would be safe cases actually litigated through the appellate level, including the Minnesota Supreme again, due to zero tolerance. Court (obviously not “secret”), companies and alleged harassers who committed to fight- Missing from the paradigm was, of course, the reality of the women being harassed. ing to the death ended the ordeal with little learned and lots of lawyer fees. The mantra From unwanted touching, leering and texting to sexual assault and rape, the continuum was, “But it sends a message.” of bad acts perpetrated upon female employees is as complex as the women themselves

APRIL 2018 tcbmag.com TWIN CITIES BUSINESS 33 YOUR COURAGE. OUR EXPERTISE. Helping whistleblowers navigate their options.

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But if your integrity is challenged by corporate practices, you need someone in your corner.

Halunen Law represents whistleblowers across the United States. Linda L. Holstein LET’S TAKE A STAND

and their reasons for coming forward or remaining silent (but not forgetting). Fear of losing one’s job as a complainer, a whistle-blower, is paramount. Susan M. Coler, Partner But an equally potent, and not surprising, misgiving is the fear that report- Chair, Qui Tam Whistleblower Practice Group Selected to the 2017 Minnesota Super Lawyers List ing under such a system will result in the automatic firing of the harasser. Companies tout their “fair and equitable” investigation protocol, but a woman contemplating the reporting of harassment under a zero tolerance system is more likely to delay reporting, suffer in silence or, worst of all, try to avoid, as opposed to call out, the harasser. In truth, the very notion of zero tolerance is 612.605.4098 HALUNENLAW.COM based on the ideal not of just a harassment-free workplace, but of a sort of uto- pian environment where predators will never be hired, much less fired. Unfortu- nately, predators are present but rarely accounted for. There are better ways than a so-called “zero tolerance” tagline to stop their behavior. 2 ) The statute of limitations under Minnesota law is one year following the most recent incident of harassment; under federal law, as set forth by the MONTHLY LUNCHEON: Equal Employment Opportunity ARTIFICIAL INTELLIGENCE Commission (EEOC), it is 180 Defining the universe of Robotics, Automation, and Artificial Intelligence days from the most recent incident. May 15 • 11:30 am Much of the pushback to the recent national outcry over sexual misconduct Windows on Minnesota is the shock that men have lost jobs and careers over allegations stemming back IDS Center, 50th Floor, Minneapolis 20 or more years. “No due process; no chance to defend himself,” people lament. Such lamentations have often resulted in additional women coming forward To register. visit www.acg.org/minnesota with similar allegations against the accused harasser, pointing to a “pattern” that adds credence to the original claim. Questions, contact [email protected] or 612-590-1041 In a workplace setting featuring employees who are not famous, rich or Attire: Business otherwise publically noteworthy, reports of harassment should always be dealt $35 Members | $75 Non-Members with swiftly and thoroughly. Even more important is encouraging the reports themselves to be made as soon as possible after an incident occurs. Human resources professionals are constantly frustrated by employees “not SPONSORS: following” their carefully crafted policies. Indeed, the U.S. Supreme Court has actually held that an employer can defend itself in a hostile environment lawsuit by asserting that the plaintiff “unreasonably failed to take advantage of any preventative or corrective opportunities provided by the employer.” Meaning, she didn’t follow our policy. She reported too late, or never at all. No company wants to litigate a sexual harassment claim. And most of the “litigating,” as of late, has taken place in the press and social media, not in a courtroom.

34 TWIN CITIES BUSINESS tcbmag.com APRIL 2018 Workplace Harassment: Out of the Shadows It’s been a common practice for sexual harassment settlements to be reached outside of the public’s view. Or victims remained silent and there were no consequences for the people who engaged in the harassment. But the infamous case of Hollywood producer Harvey Weinstein brought the problem of sexual harassment out of the shadows in October. After the Weinstein Company fired co-founder Harvey Weinstein, other prominent and powerful men were terminated or forced to resign when harassment allegations were reported in the news media. The #MeToo movement was born as women publicly revealed on social media how they’ve been harassed. In Minnesota, national and local harassment cases are prompting private and public employers to re-examine what they are doing to prevent workplace harassment and how they are going to handle it when it does arise. Minnesota conversations about sexual harassment policies, support for victims and due process for the accused are occurring more than two years after a high-profile episode in the state. Athletic Director Norwood Teague resigned from the University of Minnesota in the summer of 2015 after he acknowledged he “behaved badly” in his contacts with two women employees. In November, Rep. Tony Cornish, a Republican, and Sen. Dan Schoen, a Democrat, announced their resignations from the Minnesota Legislature following sexual harassment allegations. Discussions about ways to reduce sexual harassment continue. —Liz Fedor, TCB Trending Editor

But it is well worth noting that an actual lawsuit, which is usually the under- standable threat posed by lawyers representing alleged victims of sexual harassment, must adhere to Minnesota’s statute of limitations for sexual harassment: one year under the state act; 180 days under the federal act. While these timelines can include reporting to the Minnesota Human Rights Department, the federal EEOC, various city agencies and the like, the law is designed to facilitate a resolution within a reasonable, and relatively short, length of time. Employees should know this. Those same anguished human resources professionals bemoaning a suffering woman’s failure to report might consider actually adding these statutes of limitations facts to their policies. It would encourage earlier reporting and fairer and more balanced investigations. 3 ) Bystander intervention is the most realistic way to encourage reporting and change your workplace culture. If it takes a village to raise a healthy child, it takes an entire workforce to foster a harassment-free culture. The very subject of sexual harassment has tradition- ally been steeped in secrecy: protecting the identity of the accuser, honoring the privacy rights of the accused, promising confidentiality in the investigation, signing on to a non-disclosure agreement. Corporate executives routinely express fear that sexual harassment training will just bring “them” (alleged victims of harassment) “out of the woodwork.” This is a dangerous and destructive attitude, mired in the outdated act of shaming the victim. In order to get buy-in from employees not inclined to harass nor self-identifying as likely to “be harassed,” the employer has to emphasize that sexual harassment is simply more likely to occur than not, in any workplace. It is a problem that these “other,” “non-harassing” employers can help solve. The concept of bystander intervention—encouraging employees to speak up when they witness a forced embrace, hear a crude remark or racist joke, are copied on a pornographic text—is key to stopping harassment. If employees are silent about what’s going on in the next cubicle, that is, what is “going wrong in the next cubicle,” those employees are complicit in the wrong. Only a strong and consistent message of support from the employer can change that silence to action taken on behalf of all. tcbmag

Linda L. Holstein has defended companies and individuals accused of sexual harassment for 35 years, in addition to providing training and policy guidance to employers. She can be reached at [email protected].

APRIL 2018 tcbmag.com TWIN CITIES BUSINESS 35 Small Ball

Low pitches were thought to be the hardest to drive for extra-base hits, so Meets pitchers were trained Big to throw low. Data As the analytics revolution washes over Target Field, we look at how data is changing the Minnesota Twins.

by Adam Platt On the green fields of Florida, on a temperate winter day, the 150-year-old game of baseball’s reemergence implies permanence and tradition. Kids and adults line up The Uppercut Swing for autographs from star players while minor leaguers, some spending Data convinced teams to emphasize their first year in the U.S., nervously navigate warmups. a historically low-production swing But behind the façade of the familiar, a rethinking is underway, replac- and changed the face of ing values like “clutch” and “a gamer” with a metrics-based approach. It the World Series. is an evolution that mirrors the one taking place in the business world, where technology has brought with it reams of data and changed the understanding of how companies win. 20 18

36 TWIN CITIES BUSINESS tcbmag.com APRIL 2018 PHOTOGRAPHY BY BRACE HEMMELGARN MLB Statcast data indicated a certain type of swing made those pitches hitable.

The result was an increase in power and home runs for the teams that employed it.

APRIL 2018 tcbmag.com TWIN CITIES BUSINESS 37 So this winter the Twins are prepar- notorious 59-103 2016 season, the worst Derek Falvey, referencing the truism “the ing for the season somewhat differently. in team history. eyes don’t lie,” and the sense that teams Batters are practicing an uppercut swing That July, longtime general man- were making poor decisions by relying at a hitting cage designed to reject ground ager Terry Ryan—a favorite within the on human factors with built-in flaws. balls. (New designated hitter Logan Mor- organization and MLB, known for his Falvey arrived to implement a system rison was signed out of free agency after a gentlemanly old-school approach—was that is less about a single method or 2017 renaissance built on the uppercut.) issued his walking papers, as the team approach, but a discipline built on disci- Outfielders are practicing route efficiency went in search of new leadership and pline. “We’re trying to root all our deci- to reach hit balls faster and cut off extra new approaches. sions now in evidence. Can we subject base hits. “We’ve redesigned our drills for In less tradition-bound baseball our opinions to a test to verify them?” that phase of play,” explains Twins coach organizations, a revolution had already he asks. “Can you create a system to help Jeff Pickler. taken place, rooted in the ideas of the people make decisions and scale it to the These ideas are rooted in “Statcast” Oakland A’s under general manager Billy entire organization?” data that Major League Baseball has been Beane. Moneyball, written by financial

WAR collecting at stadia since 2015. Pickler is journalist Michael Lewis, details how Evidence-Based (Wins Above weary of the “revolution” talk, seeing it the underfunded yet overproducing A’s The Twins’ inability to develop pitch- Replacement) as just another evolution of the game. used data to identify inefficiencies that ing, the foundation of the game, made “It works best when baseball people ask it could exploit to even out its economic Ryan vulnerable. Falvey was hired from This all-inclusive stat questions that lead to research that leads disadvantages. the Cleveland Indians at age 33, in part has become a darling to players,” he says late one afternoon in Moneyball, later a hit movie star- for his reputation as a pitching savant, of the baseball metrics the Hammond Stadium locker room. ring Brad Pitt, is widely misunderstood but also for his holistic take on how the among the public and even within the organization had to change. “Derek and community. It attempts Old Days, Old Ways game as the story of baseball’s subjuga- Thad [Levine, the Twins’ new general to define how many Since the glory of the 1991 World Series, tion to computers. Yet it is a reasonable manager] have worked hard to break additional wins a player is where a team of scrappy “gamers” turned touchstone for the early years of an era down walls within baseball operations,” worth over the course of clutch and grit into legend, the Minne- of rethinking the game that found the says Twins president Dave St. Peter, “en- a season compared with sota Twins have finished 10 games above Twins, in 2016, among a small handful of suring that scouts and player develop- a “replacement-level” .500 only four times, with zero returns to teams on the outside looking in. ment staffs are working hand-in-hand, player—a player who the fall classic. Even the so-called glory The Twins were a scouting-dominant sharing ideas, etc.” would not command a seasons of the ’00s, with six division titles, organization—the observational skill of The Twins are quick to point out they generated a humiliating 8-22 playoff re- sage veterans was valued above all and were not running a 19th-century opera- premium above the major cord, where the Twins showed themselves guided player personnel decisions. But tion that stood willfully in opposition to league salary minimum. to be hopelessly outmatched against the those decisions were failing the team, the game’s evolution. The Twins did have game’s best teams. as organizations with less revenue and data analysts, notes Boston University Cue the move to Target Field in 2010, poorer facilities (Tampa Bay, Oakland) professor Andy Andres, who has long marketed to taxpayers to allow the Twins continually out-drafted, out-traded and studied analytics and sports, “but it’s not to create a revenue base for permanent out-played them. clear how much it impacted decision- competitive balance. A decade in, their “Baseball was late to understand the making [under Ryan]. It’s pretty clear playoff record is 0-4, with one division role of cognitive bias,” explains Ryan’s they’re now serious about it.” title and four last-place finishes, plus the successor, Twins chief baseball officer The Twins were hamstrung not just

Analytics Extrapolated: The Uppercut Swing For a long time now, the mantra in pitching was that for] ground-ball-based hits.” effective pitchers threw “down in the zone”— sliders, But the Astros and Dodgers excelled not just sinkers and cut fastballs. The theory was that a low because they alone had the data. pitch was hard to drive out of the infield. “The down-in- “The uppercut swing phenomenon required buy-in,” the-zone pitch had been accepted as the gold standard,” explains Adler. “It required coaches who trusted the data explains Twins director of baseball operations Daniel [and] who had good relationships with players. Asking Adler. But things were about to change. spectacular athletes to change what [they] do and how The Astros and Dodgers used MLB Statcast [they] do it is not easy.” (He notes that newly signed DH data that indicated low pitches hit golf-style had an Logan Morrison remade his swing last season with enhanced propensity to be home runs. Suddenly, the dramatic improvments in power as a result.) pitches most batters avoided became desirable to And it requires skill, as well. “If you can’t [hit] the teams that had crunched these numbers. ball out [of the ballpark], it’s just a fly-out swing,” notes only optimize for the present,” Andres says. “The next “The uppercut swing is like the three-point shot in Twins’ bench coach Jeff Pickler. evolution is pitching up in the zone” to combat it. the NBA,” explains Adler. “When they go in, you get 50 Post-World Series, everyone knows about the But baseball is a cat-and-mouse game, and “data percent more points. Fly-ball-based hits become home uppercut; but not every team can or will adapt. And won’t ever change that,” says Falvey, “so you are really runs, which justify [a swing that gives up the opportunity smart pitchers will certainly counterattack. “You can creating a learning organization rooted in a philosophy.”

38 TWIN CITIES BUSINESS tcbmag.com APRIL 2018 Nuances in positioning and movement of the catcher’s mitt resulted in a higher percentage of called strikes.

Catcher Framing Scouts discovered a trait that gave some catchers a unique advantage—until every team figured it out. Brace Hemmelgarn PHOTOGRAPHY BY BRACE HEMMELGARN

by an old-school, siloed approach, but also leading edge of big data,” insists Dan At- Next came WAR, or wins above a lack of front-office talent. “Dating back kins, executive director of MinneAnalytics, replacement (see opposite page), which FIP to the process to find new leadership of a nonprofit serving the state’s data science attempts to value player contributions in (Fielding Independent our baseball operations, every candidate and analytics community. terms of the additional wins they repre- Pitching) we interviewed shared a vision to grow Analytics first came to the fore in sent per season. FIP is an attempt to improve on our internal team,” St. Peter says. “From a sports among a community of baseball Falvey’s arrival coincided with the earned run average in evaluating pure staffing standpoint, the Twins base- fans looking for new ways to think about broad-based emergence of Statcast, MLB’s pitchers. All pitched outcomes that ball operations was smaller than almost the game’s foundational statistics, many data measurement tool. Atkins says in involve hit balls (other than home any team in the game.” of which offered a distorted view of why Statcast’s first game, at Wrigley Field, “the runs) are affected by the quality The organization did not approach its some players were effective and some Cubs collected more data than they had in effort to change with characteristic frugal- weren’t. “Some of it was taking exist- a century plus of baseball history.” of a team’s fielding. Pitchers who play ity. “We’ve invested millions of dollars in ing statistics and coming up with novel This is where the “big” in big data in front of better fielders have incremental staff, systems and technol- insights,” says Andres. comes in, and for the first time in its his- lower earned run averages, but may ogy—all aimed at ensuring we are in the An early breakthrough was a way to tory, Major League Baseball has more data not be better pitchers. FIP tries to best possible position to build a perennial define a baseline player’s performance than it can manage. Which explains why make that clear. championship contender,” says St. Peter. to measure other players against. “[Data the Twins say one of their biggest expertise Though the philosophical tug-of-war journalism pioneer] Nate Silver’s ‘value gaps is in computer programming. “They over baseball’s soul (metrics vs. observa- over replacement’ was an early effort to need it,” says Atkins, “to reduce the data to tion) is old news, “sports was not on the judge who is worth signing,” says Atkins. something usable.”

APRIL 2018 tcbmag.com TWIN CITIES BUSINESS 39 “Baseball was late to understand the role of cognitive bias. We’re trying to root all our decisions now in evidence. Can you create a system to help people make decisions and scale it to the entire organization?”

—Twins chief baseball officer Derek Falvey

PHOTOGRAPHY BY BRACE HEMMELGARN

Exploiting Inefficiency as something observed by scouts, but it Remember when Target started offering was pooh-poohed by analysts because A Career In Baseball Data? coupons for pregnancy-related goods to of the difficulty in measuring it,” says Back in the day, a career in baseball usually flowed from playing or coaching the game. women who weren’t pregnant, or at least Adler. “We tend to be dismissive of But more and more, an on-field background doesn’t much lay the groundwork for a thought they weren’t? “Target studied things we can’t measure. career in the front office. the buying history of women who were “The scouts were right, and it came More and more of the game’s operating leadership has advanced degrees from of childbearing age. They found a ‘tell’ into broad acceptance, but there were in the pregnant women versus a control only a few years to make hay,” Adler notes. elite universities (Twins director of baseball operations Daniel Adler holds law and group,” explains Atkins. It allowed the “Huge market inefficiencies close business degrees from Harvard) and little if any time on the field. They come with a software to, in some cases, make an edu- quickly now,” says Andres. Teams discover focus on developing systems and processes to optimize the game. And they are not cated guess that a woman was pregnant “ ‘Holy crap, this is real.’ It gets public. and grizzled veterans. Terry Ryan is 64; his successor, Derek Falvey is 35 and is far from even before she knew. all teams figure it out. The Twins were late the only leader in MLB in his 30s. Atkins says this mirrors the contem- to pitch framing because they didn’t have “There is definitely a shift toward youth because of analytics,” says Boston porary search for relevant data in sports. the scouting or analytics to employ it.” Or University professor of mathematics Andy Andres. “The skill sets in play are very “So you can’t predict how Joe Mauer will they doubted it. do versus a pitcher he’s never faced, but The Twins were expected to be more different now.” you can input a bunch of factors, includ- active in this off-season’s constipated “The jobs are extremely taxing, and they age people in dog years,” adds Adler. ing how Joe fares against like pitchers and market for free agents. “There were free An MIT degree is not yet essential, however, despite rumors to the contrary. “You come up with a pretty good guess.” agents we thought would be inexpensive don’t have to be great at math, you need to understand what the math is telling you,” The Twins are racing to bring their because we thought we had identified says Dan Atkins, executive director of MinneAnalytics. He notes that the University of analytics up to league average while aspects of their game that other teams Minnesota’s Carlson School of Management wants data literacy to become integral at finding weaknesses or “tells” to exploit hadn’t,” says Adler, “but they weren’t the undergraduate level and that “data scientist” leads lists of the most promising jobs before other teams discover them. Ask- inexpensive because we weren’t as unique in America. ing Falvey and his team to discuss these as I thought. The game is evolving so fast modes and methods elicits mostly vague that we need to be an organization that Falvey worked to make an attractive case to Adler as he finished his degrees at values and themes. can adapt quickly.” Harvard, telling TCB that executive “talent wars are real” within pro sports. Falvey “The rise of analytics has made teams In the past, player agents or other says the Twins have restructured their baseball operations “to allow new leadership more secretive,” says Andres. They won’t teams could rely on non-analytically opportunities” to better retain talent. tell you what they’re looking for in a minded teams to distort or disrupt Adler, who majored in economics and physics, describes himself as intensely player because “they believe they possess the market by filling their rosters with “interested in how people make decisions.” He says he chose the Twins in part because something proprietary.” catchers who could not frame pitches or he “had been told organizations with new leadership were good places to go.” He was “In terms of exploiting inefficien- overpaying for free agents whose metrics intrigued at the thought of getting in on the ground floor of what Falvey was building in cies, one of the things I struggle with indicated their game was flawed. in baseball is where are the competitive Atkins offers this analogy: “I could Minneapolis. He leads the Twins’ R&D group and consults on player salary arbitration. advantages to be found?” says Daniel count cards in a poker game, but because “Daniel is a bright young man,” notes Andres. “Twins fans should feel very Adler, the team’s new director of baseball my brother-in-law is emotional, he bets fortunate.” operations. in ways that force a rational player to act Take the technique of “framing” [see irrationally.” page 39], where the catcher positions his Falvey sees that era waning. “Teams glove in a way that elicits a more favor- are creating systems to evaluate free able strike zone. “Pitch framing started agents. Creating models to try to extrapo-

40 TWIN CITIES BUSINESS tcbmag.com APRIL 2018 You can’t predict how Joe Mauer will do versus a pitcher he’s never faced, but you can input a bunch of factors, including how Joe fares against like pitchers, and come up with a pretty good guess.

—MinneAnalytics executive director Dan Atkins

late their asset value. Smaller payroll business,” says Atkins. “It involves read- has not been as reliable, though Adler teams are less disadvantaged in an ing and reaching the decision maker. expects Statcast data to eventually evidence-based environment.” The translator is rarely the advanced improve that. analytics guy who can’t look you in The short-term future of analyt- Translating the Nerds the eye.” ics, he says, is less about crunching the As MLB coalesces around an analytics same data differently, but using the mindset, the Twins brain trust believes Eye Test league’s new technological infrastruc- a difference-maker is going to be the No team has moved more heavily ture to develop “measurables,” he says. ability of the nerds to communicate away from human factors as baseball’s “Cameras are tracking everything.” with the jocks. 2017 World Series champion Houston Human factors will inevitably in- “Finding things yet to be identified Astros, who completely rejected the tervene. “We’re still subject to so many is important,” says Adler, “but being value of observational expertise last biases,” Adler continues. “Take how we able to utilize the things you already year when they fired most of their pro present trades to another team. Should know is more important.” scouts. we present data, how much, and when Put another way, when, in the old But not everything in the game is in the process?” baseball paradigm, everyone was a optimizable with data, and the Twins It should be no surprise that player or former player, the mindset don’t plan to follow suit. analytics may be affecting the game was similar across the organization. “The best scouts judge char- in unanticipated ways. Not so much today. “There are two acter,” says Adler. “A guy can have “Games are probably getting lon- different skill sets at work,” explains amazing stats, but if he’s a horrible ger because of analytics,” says Andres. Andres. “Playing baseball takes teammate, his ceiling will be limited. As teams fixate on waiting for the right extraordinary skill. Analytics is also Our goal is to be able to quantify pitch to achieve the correct launch an extraordinary skill. Connecting the how accurate our assessments are, angle and exit velocity, at-bats have be- two is not as simple as you’d think.” with a goal of weighting our subjec- come longer, more pitches are thrown Atkins agrees: It’s not as easy as tive data.” and more substitutions take place. A “the guy from the office says to move “These people are still very valu- three-hour game is now shorter than 15 feet to the left.” Teams need “trans- able,” says Andres. “Nobody relies on average. That’s not necessarily a good lators,” on- or off-field staff who can them exclusively anymore. Data on thing. “The appeal of long games is explain how analytics translate to baseball mechanics is [now] dominat- waning,” Andres says. “They have a lot the game in a way that’s clear and ed by analytics; data on makeup and of business data on the game and how motivating. flexibility is an observational skill.” people watch it.” MLB and its players “We focus on what is actionable,” Adler says the Twins’ perspective are now at odds over game lengths. says Falvey. is that “there’s no evidence the game is So at some point the best interests “But we’re not going to players good at understanding psychological of the game may conflict with the best talking about reaction time and route factors and extrapolating them into interest of a team or a player. “We have efficiency,” says Pickler. “We talk about outcomes, nor [is it able to measure] a greater obligation to the sport and the how the best outfielders [play] and our resilience and durability. Trying to game than what happens in a specific drills reinforce that.” project [the trajectory of] young play- game,” says Falvey. “We have to be vigilant This expertise is not unique to ers is not data strong.” He adds that the to unintended consequences.” tcbmag baseball or sports. “Translation is a defensive side of the game remains an job description that has emerged in area where metrics’ predictive ability Adam Platt isTCB ’s executive editor.

03-18 TCB Coherent Solutions.indd 1 2/1/18 2:33 PM APRIL 2018 tcbmag.com TWIN CITIES BUSINESS 41 The TCB Q&A

In a tumultuous election year, the Minnesota Business Partnership’s executive director tackles a workforce shortage, racial achievement gap and business competition threats.

By Liz Fedor

Charlie Weaver’s political education began when he was in employers. The Partnership weighs in on public policies affect- grade school and his father, Charles, was serving as a state leg- ing education, health care, and jobs and the economy. islator from Anoka. Weaver was former Gov. Tim Pawlenty’s chief of staff Weaver ultimately followed his father’s path in two key re- when he accepted the Partnership’s executive director job. spects—earning a law degree and serving in the Minnesota Now 60, Weaver has entered his 15th year in this pivotal po- House of Representatives. His early immersion in public policy sition in Minnesota’s public policy arena. In his IDS Center debates and exposure to political deal-making helps explain his office in downtown Minneapolis, Weaver talked with TCB longevity at the helm of the Minnesota Business Partnership. about the gamut of challenges facing Minnesota and the The organization, whose mission is “ensuring that the state’s policy solutions that the Partnership supports. The follow- economy remains strong and globally competitive,” is coming are excerpts of the interview, which have been edited for posed of the CEOs and senior executives of Minnesota’s largest length and clarity.

Q You were elected to the Minnesota Our politics are obviously different. Q The Minnesota Business Q President Trump has taken a hard House in 1988. What have been It’s harder to reach across the aisle today Partnership represents the state’s line on immigration. Many of your the biggest changes in Minnesota’s than it was then. When I was elected, it largest employers. What are their members have employees who are business climate when you contrast was a much more collegial environment. greatest challenges? immigrants, ranging from highly 2018 and 1988? The passions weren’t any weaker. But we No. 1 is talent. The one thing that keeps educated people working in STEM Social media has had a profound societal used to be able to debate on the House them up at night is: Will the talent be positions to lower-skill employees in impact and as a result it’s affected all floor, walk off the floor and go have a available in Minnesota to grow and agriculture processing. As Minnesota businesses. Globalization has also in- beer with the people we were arguing expand those companies here? It’s a faces a worker shortage, what creased because of social media and the with. Now that’s seen as a weakness, it’s significant challenge. A lot of our work- policy priorities do you have on internet. The worldwide business com- seen as a compromise. That has had a force is retiring and the pool of workers immigration? munity is smaller than it has ever been. significant negative impact on politics in is shallower. And that really gets to the We need open borders. We need immi- Our companies compete globally. It used general and it has also affected the ability challenge of the achievement gap and grants in this state. It’s all across the spec- to be, when I was elected to the Legisla- to work with the business community. the problems posed by it. We also need trum. It’s the doctors who come in and ture, our biggest competitors were Sioux immigrants in this state to successfully work at the Mayo Clinic to the person Falls or Milwaukee. Now it’s Ireland or compete and provide talent for our com- who is working in a slaughterhouse for Australia. panies to continue to prosper here. Hormel to the construction workers for

42 TWIN CITIES BUSINESS tcbmag.com APRIL 2018 PHOTOGRAPHY BY TRAVIS ANDERSON APRIL 2018 tcbmag.com TWIN CITIES BUSINESS 43 Mortenson and Ryan. An immigration Q Education is a core topic for the We need immigrants. Q Your organization has advocated policy that promotes legal immigration Partnership. What policy innovations We need their talent, giving families in the lowest- and getting to a place where those who would ensure that Minnesota has the performing schools a stronger role in are here illegally can get to legal status is qualified workforce it needs? skill, brainpower and driving improvement. What are some really important. Minnesota is the second worst in the of those strategies? country in terms of the economic dispar- hard work. No options are off the table from our Q President Trump went to ity gap and we are worst in the country perspective. What works in one district Washington as a disrupter. Based when it comes to the [racial] achieve- may be different from the other. One on what he has done in his first year ment gap, and they are linked, obviously. thing we’ll be talking about at the Leg- in office, what are actions of Trump Frankly, you’ve got two systems here. islature this session affects parents with that many of your members support? Most of Minnesota’s public education students in schools that have been failing What are actions they find troubling? system is very good. It’s one of the reasons for two years. In other words, in these Well, mission accomplished on the dis- that great companies grew up in Min- schools the students are not even close rupter. [Laughs.] He did that. Two issues nesota. General Mills, 3M and Target were to reading or doing math at grade level. that we find troubling are immigration able to recruit talent here because we’ve Those parents should have the ability to and trade. Open and free economies got a terrific public education system. Q What other interventions might change that administration. They should across borders to trade goods is vitally That is not the case in many cities be needed to support some families? be able to go: “This school is failing our important, and it is particularly impor- that companies try to lure their execu- If you are in an affluent two-parent children two years in a row, we demand a tant to Minnesota companies like 3M, tives to, so it is a big plus. The challenge is family living in a suburb and you change.” Other states have looked at this Graco, Polaris, Cargill, CHS and Land in our core cities of Minneapolis and St. have money to send your children approach and we think we should look O’ Lakes. They are amazing companies Paul. In our view, what we need to do to to enrichment programs it’s quite at it here. that really depend on trade—not just address the achievement gap is set high different than if you are in a low- with Canada and Mexico, but across the standards and stick to them. Make sure income, single-parent family in Q Do you favor mayoral control of globe to be successful. Ecolab, Pentair and that parents understand them and mea- Minneapolis or St. Paul. school districts in urban districts? Medtronic are all companies that rely for sure the kids against those standards. So It’s enormously important. Recently I was It depends on the district. You’d need the a significant portion of their revenues our testing in Minnesota is really impor- at Banyan, a community school in the right mayor who is willing to dive into on free trade. When President Trump tant, and that we have one test statewide Phillips neighborhood in Minneapolis that. But it’s proven successful in Chicago talks about walking away from NAFTA that compares apples to apples. [where 60 percent of the households have and Washington, D.C. With the right or what he did in walking away from the an income below $35,000], that focuses players in place, that’s something we sup- Trans-Pacific trade agreement [TPP], Q Please elaborate on your on exactly what you’re talking about. It port. Right now, frankly, in Minneapolis, that’s troubling. Ultimately it hurts Min- perspective on testing and standards. engages the parents, making sure the the school board is controlled by the nesotans and it results in fewer jobs. One of our concerns is that more of our stu- parents and Banyan travel together down unions. The same is true in St. Paul. So The second part is immigration. dents are being told, “You don’t have to take the path with their student. They mea- often our systems, especially our failing Given the challenge of increasing our that test.” And that is a big problem because sure like crazy and use data like crazy to systems, spend all of their time worried workforce from within Minnesota, we it is the only way that parents will know inform parents about how their students about the adults and not enough time need immigrants. We need their talent, how their kids are doing. Test students and are doing. There is no doubt that the worried about students. skill, brainpower and hard work. So report those results to parents, teachers and solution to the education challenge in- anything that would limit that, whether it schools, so parents know how their students volves the family, the community and the Q Is your organization going to push is building a wall or just arbitrarily kick- are doing. Then give parents choices. Give school. And it frankly involves employers. for any major tax changes during ing them out of the country, would be them opportunities to move their students When we can come together, then the 2018 legislative session? Would devastating to Minnesota’s economy. to schools where they can be successful, no you have success. On the other hand, I they primarily consist of adjustments In terms of what he’s done well, matter what kind of school that is. want to emphasize that poverty is not related to federal tax law changes? I think the tax bill will result in more Test scores at schools should be an excuse for failure. We proved that in Clearly, the Minnesota response to the jobs for Minnesota, and more invest- shared publicly. By publishing the Minneapolis at Harvest Prep. Or at Hi- federal tax bill will probably be the biggest ment, capital expenditures and growth information, parents will know where awatha Academies. These are enormously topic at the 2018 Legislature for every- for Minnesota companies. The overall the good schools are. Then give them the successful charter schools, public schools body. Our overarching principle is going goal, which is let’s keep the United States opportunity to send their kids to schools that take anybody who comes through to be “Do no harm.” As [legislators] think competitive, is a worthy one. that work. In Florida, they give schools the door. The students are 90 percent on about responding to this federal tax bill, an A, B, C, D or F, they rank schools based free and reduced lunch, and in some cas- don’t make Minnesota an outlier from a on how kids are doing on testing. When es 100 percent children of color, and they tax perspective as we try to compete with Gov. Pawlenty was in office, he had a rating succeed. While certainly there are lots of other states and other countries. system that was published in the newspaper factors that go into success at school, we every year that told school by school how can do it. We certainly shouldn’t be worse kids are doing. We’ve gotten away from that than schools in Chicago or Washington, and we’ve frankly lowered the standards in D.C., or Detroit or New Orleans, and Minnesota. We used to require that students right now we are, in terms of raw-data could read and do math at a 10th-grade test scores. level before they could get a diploma. The Legislature got rid of that requirement, which was a big mistake. There is no requirement for the students to demon- strate any competency to get a high school diploma, which affects our employers.

44 TWIN CITIES BUSINESS tcbmag.com APRIL 2018 Q During the 2017 legislative Q Minnesota has a low Q On the health care front, President Q You referred to yourself in the past session, the Partnership supported unemployment rate and a relatively Trump and the Republican- tense as the “politician that I used a “preemption” statute, which would low GDP growth rate (1.3 percent controlled Congress have not to be.” Do you have any interest in have blocked Minneapolis and St. in 2016). Do you think Minnesota replaced ObamaCare. What are your running for statewide office? Paul from establishing their own should have stronger economic priorities on health care for the 2018 Like a lot of people, I would love to be employment laws, including on growth? What factors are limiting the Minnesota legislative session? governor. I just am not willing to make wages. Gov. Mark Dayton vetoed expansion in Minnesota’s economy? Our goal is a patient-centered, consumer- the sacrifice to get there. I love public pol- the “preemption” bill, and the city We’re just now getting to the tipping point based model. No. 1, you should reward icy issues. But I really love working with of Minneapolis prevailed in court where talent will limit expansion. When I the medical community for prevention as the men and women who lead these great and is implementing a minimum think about the challenges going forward, much as for procedures. Minnesota actu- companies in the state. I am blessed with wage that is higher than the state’s certainly the regulatory and tax environ- ally leads the country in that. The model the best job in the state because I get to minimum wage. Why is a patchwork ment is something you can’t ignore. In this has got to change, otherwise we aren’t scratch my political itch through working of local workplace mandates such a hyper-competitive global economy, we going to get at the cost factor. And the with legislators and the governor. On the big concern? can’t ignore the consequences of a high tax challenge with all this health care reform other hand, I get to be around some of It’s just an enormous burden for both rate and being in the top five in a variety of is that it frequently ignores costs. Min- the greatest CEOs in the world. large and small businesses. For small taxes nationally. And the regulatory envi- nesota has been one of the better states in companies, it can cost them their liveli- ronment here has an effect on our ability terms of trying to attack that. Q Do you still view yourself as a hoods. Just on the question of the patch- to grow and retain companies. Those are Regarding the Medicaid aspect of Republican? work, it makes no sense to have different factors, plus the demographic shift. federal reform, we cannot leave those I’m conservative. Yeah. But I am a labor laws in every city in Minnesota. Until the past year, we had a net loss who are disadvantaged behind. The result Republican like my dad was a Repub- Ultimately, it’s going to cost people their of Minnesotans who were leaving the cannot be fewer people with insurance lican. I am a pragmatic Republican. jobs because there is a significant cost to state and going to work in other states. or penalizing the disabled. Those are I’m a Main Street Republican. I’m an the companies. We need to figure out how to attract and contributing parts of our society, and we Anoka Republican. retain millennials and bring young people need them. As Hubert Humphrey said, Q The push for a higher minimum back here. 3M was cited as one of the best we’ve got to take care of people at the Q There are not many people who wage and other work benefits is linked companies in the country for attracting dawn of their lives and the end of their can be funny when giving a speech or to a relatively high cost of living in millennials. General Mills, Best Buy and lives. We’ve been innovative and smart presentation. When did you discover Minnesota’s urban centers, including Target are really good at that, as are some here in Minnesota and we just need to that you could make people laugh? housing. What do you think needs to other companies. So I think we are on the continue to be leaders. How does it affect the way you do occur to lift more people into jobs that path toward doing a better job. The quality your job, working with some of the pay enough to support a family? How do of life here—music, good food, good tran- Q At the Minnesota Business most powerful people in the state? we increase the number of solidly middle sit—are factors that matter to millennials. Partnership’s annual meeting in My father was really good at that. My class jobs vs. people relying on multiple They don’t want a car. That’s one of the September, beyond the serious father, Charles, was a guy who was a part-time, low-wage service jobs? reasons we supported the transportation speakers, you had a theme of “Fake Republican back in the ’70s, but a close Give students a good education. The bill last year. A healthy, robust transporta- News.” You showcased humorous friend of DFLer [former governor] foundation for a good job is a good tion system is important to attracting videos featuring notables such as Wendy Anderson. He worked very well education. It allows people to earn a talent, and we’re making progress there. Richard Davis, Doug Baker and across the aisle and passed some remark- living that can support a family. It allows former Gov. Pawlenty. Why do you able legislation. He had a great sense them to have a home, it allows them to Q Last session, a Republican- think humor is important at that of humor and used it very effectively. I take care of their family. We also focus controlled Legislature and a DFL event? saw how that really helped him when he on retraining. We better pay attention governor ultimately agreed to It’s important to take the issues seriously, would testify or take votes. to retraining people who are still in the increase transportation spending but not ourselves too seriously. That’s He was also chair of the Met Council years in which they can actively work. We by allocating some existing sales tax been a brand of the Partnership. We talk and when he went out to one of the need to keep them in the workforce in revenues to transportation. They also a lot about serious issues, but it’s really suburbs or cities, it was not a friendly some capacity. reached a deal on a bonding bill to important that we all retain a sense of environment. So he would disarm people fund roads and bridges. What kind of humor. These issues are important, but with a wry sense of humor. I learned Q How does the Partnership view grade would you give the condition of family and faith and other things are a lot from the best. I don’t know if I’m good retraining mid-career people? Many our road and bridge system? more important. It’s so easy sometimes— at it or not. The most effective humor is people are living longer and they I’d give it a B. Commissioner Charlie Zelle whether you are a politician like I used to to make fun of yourself and for me that don’t have defined-benefit retirement has done a very good job of bringing more be or a business leader—to take yourself means I have a lot of material. tcbmag plans and need to work longer. Who efficiencies and more strategic thinking to so seriously. It’s such a mistake. Life is should pay for the retraining—a MnDOT. The success last session resulted short. Do your best. Liz Fedor is the Trending editor of Twin combination of the state, employers from the fact that we went to Democrats Cities Business. and individuals? and Republicans arm-in-arm with the Yes, it’s a partnership. Certainly state trades, the unions. We went into their offices involvement is going to be important. together and said, “This is important to the I would give the Dayton administra- labor community and the business commu- tion credit that they’ve improved their nity.” It’s one of those issues where we can retraining program and made it smarter unite. That’s why you saw a bipartisan solu- and more effective. Now many of our tion at the end that included both roads and members are actively engaged with the transit. It was hard work, but there are many community college and state college opportunities for business to work with system. labor on transportation and other issues.

APRIL 2018 tcbmag.com TWIN CITIES BUSINESS 45 TRENDING | COMMERCIAL REAL ESTATE

WIDE-OPEN

Office vacancy rates are climbing in the Twin Cities. Office Vacancy Varies But it’s tough to find deals in the best buildings. by Submarket

By Burl Gilyard A search for office options will depend a lot on location; vacancy rates and rental rates can vary considerably by submarket. In downtown Minneapolis, overall of- fter several years of steady improvement, don’t have a whole lot of leverage when the vacancy fice vacancy is nearly 20 percent, office vacancy rates are starting to increase levels are low over there.” but notably lower for top-shelf, again in the Twin Cities. Vacancy rates C&W market statistics reported an overall office Class A properties (14.6 percent). Ain downtown Minneapolis are already close to 20 vacancy rate of 16.7 percent across the Twin Cities The West market, with Interstate percent and expected to keep climbing. Histori- at the end of December, but the rate was sharply 394 as its spine, has the lowest cally, that’s high. But the post-recession reality is higher in downtown Minneapolis, at 19.6 percent. office vacancy rate in the metro, at that higher vacancy rates have become the “new C&W’s market research showed 5.3 million square 12.5 percent. The Class A market normal.” feet of vacant multi-tenant office space in down- in the West is even lower, at 10 What does that mean for companies and busi- town Minneapolis—more room than four IDS percent. ness owners who are shopping for new space? Do Center towers. A recent market report from the tenants have a chance to cut some sweet deals? Is it The office vacancy rate for Class B properties in local office of Chicago-based Cush- worth the hassle and expense of moving to a new downtown Minneapolis was higher still, at 27.4 per- man & Wakefield surveyed local building—or is it better to stay put? cent at the end of 2017. It’s a different story in North vacancy rates at the end of 2017. “The leverage a tenant has really will vary,” says Loop, where C&W tallied a year-end vacancy rate Here are some of its findings. Jaclyn May, an executive director with the local of 12.3 percent—even lower than the 14.6 percent office of Chicago-based commercial real estate ser- vacancy rate for Class A properties in downtown Downtown Minneapolis vices firm Cushman & Wakefield (C&W). “It’s very Minneapolis. Overall Twin > Overall | 19.6% much a building-by-building scenario, neighbor- But market watchers think that office vacancies Cities office > Class A | 14.6% hood by neighborhood.” will climb, particularly in downtown Minneapo- market: > Class B | 27.4% Buildings offering desirable amenities, attributes lis. One reason is several projects in the pipeline, 16.7 percent > Class C | 15% and locations will often have lower vacancy rates including one by Minneapolis-based United > North Loop | 12.3% compared to the overall market; those landlords Properties which is developing the Nordic. It will don’t need to offer deals and incentives to draw add 200,000 square feet of new office space to the tenants. The North Loop area of downtown Min- market. That and other projects will add consider- Northeast | 13.8% neapolis, for example, has been drawing many able space to the market at a time when tenants’ companies who like the transit connections and demand for space does not appear to be picking up. Northwest | 17.6% energy of the neighborhood, which has a host of In the Uptown area of south Minneapolis, the new apartment buildings, bars and restaurants. Ackerberg Group, based in Minneapolis, is develop- South/Airport | 14.9% May also points to the West End area, centered ing the MoZaic East office building with about around the intersection of Interstate 394 and High- 185,000 square feet of office space. The Nordic and Southwest | 15.9% way 100 in Golden Valley and St. Louis Park, which MoZaic East are under construction, and space currently has one of the lowest office vacancy rates remains available for lease in both. In downtown St. Paul, Downtown | 17.4% in the metro. In the West End, May says, “Tenants Minneapolis, the redevelopment team hopes to West | 12.5 % SOURCE: CUSHMAN & WAKEFIELD MINNEAPOLIS-ST. PAUL MINNEAPOLIS-ST. SOURCE: CUSHMAN & WAKEFIELD

46 TWIN CITIES BUSINESS tcbmag.com APRIL 2018 BOMA Greater Minneapolis announces the 2018 Best of BOMA and TOBY Award Winners The 5th Annual Best of BOMA Gala was held on February 22, 2018 to recognize and celebrate professionals and outstanding properties in the Greater Minneapolis Commercial Real Estate Industry.

Best of BOMA Award Recipients Often the public only sees architecture without recognizing the tremendous amount of work and dedication exerted to make buildings energy efficient, comfortable for tenants, and high performing assets for their owners and communities.

Nathan Reed, RPA Caitlin Schouviller Marnie O’Byrne CBRE Hines Harvard Senior ProPerty management emerging leader of the year Service Partner of the year ProfeSSional of the year Frido Verkman Cindy MacDonald Brenda Grams, RPA Hines Kraus-Anderson Companies The Excelsior Group Senior engineering ProfeSSional PreSident’S award ProPerty management ProfeSSional of the of the year year Paul Dean Hines engineering ProfeSSional of the year

TOBY (The Outstanding Building of the Year) Award Recipients The TOBY Awards are the most prestigious and comprehensive awards in the commercial real estate industry, honoring the properties that best exemplify superior building quality and excellence in building management.

Target Northern Campus 100 Washington Square Target Corporation Shorenstein Realty Services corPorate facility category renovated Building category

Waterford Innovation Center Normandale Lake Office Park-8200 Tower Duke Realty Cushman & Wakefield induStrial office Building category 250,000-499,999 Square feet category

Thank you to our Platinum Sponsors

Thank you to our Gold Sponsors Thank you to our Silver Sponsors Accesso Services • Cushman & Wakefield Aspen Waste Systems, Inc. CBRE • CenterPoint Energy Harvard • Kimberly-Clark • LVC Clean Response • CSM Corporation SP+ Parking • Target Corporation Duke Realty Corporation • NTH, Inc. The 614 Company • Wildamere Piedmont Office Realty Trust, Inc. Ryan Companies, US Xcel Energy Schindler Elevator Corporation Shorenstein Realty Services The RMR Group Transwestern TRENDING | COMMERCIAL REAL ESTATE

draw office tenants for 750,000 square use space more efficiently and reduce feet of space in an overhaul of the overall square footage per employee former Macy’s store. continues. He is working with a client Historically, developers waited looking to trim its footprint by about until office vacancy rates dropped 20 percent, without cutting staff. below 10 percent before they consid- National research shows the ered building new multi-tenant office metro roughly in the middle of the properties. According to C&W’s statis- pack for office vacancy compared to tics, the overall office vacancy rate in other cities. New York-based REIS the Twin Cities has not been below 15 Inc., a commercial real estate data percent since 2001. Many new build- and research firm, tallied the national ings have been build-to-suit projects office vacancy rate at 16.3 percent for a single corporate tenant. for the fourth quarter of 2017. REIS The current climate certainly found Minneapolis with a higher bodes well for tenants, says Mike vacancy rate of 17 percent, which Salmen, managing principal in the ranked 37th out of 79 surveyed metro Minneapolis office of Houston-based areas. (Market research studies reflect Transwestern. As tenants weigh stay- the same broad trends, but will often ing put versus relocating, Salmen is have slightly different statistics due to CALL FOR NOMINATIONS seeing more companies willing to varying methodologies.) deal with the disruption in exchange Only three markets are below a for finding offices with modern 10 percent vacancy rate: New York Twin Cities Business will honor five amenities, including more open and (8.7 percent), San Francisco (9.8 collaborative space. percent) and Washington, D.C. (9.9 outstanding family-owned businesses, “I would say that they’re more percent). At the other end of the and the value they add to Minnesota’s inclined to move because they’re look- spectrum, many large metros have ing for a different type of workplace,” vacancy rates topping 20 percent: economy and overall quality of life. If Salmen says. Dallas (21.3 percent), Phoenix (22.4 But more empty office space does percent), Detroit (23.2 percent), Las you know about a successful Minnesota not necessarily translate into more Vegas (23.6 percent) and Memphis family-owned business and the family compelling options for companies. (24.3 percent). “Some of the increase in vacancy REIS found that office vacancy behind it - and yes, it could be a client is space that nobody wants. Some of rates increased in 33 of the 79 metro of yours, or even your own company - those out-of-date buildings become areas that it tracks, noting: “The office less and less desirable,” says Jim Vos, a market has maintained a sluggish please share with us. principal with the Minneapolis office of pace of growth throughout this ex- Cresa, a Washington, D.C.-based tenant pansion and 2017 was no exception.” To nominate, visit: representation firm. “The demand for tcbmag.com/MFBAnomination the premier buildings is still pretty good, and the rents are rising.” Nominations Deadline | April 13 Tenancy trends PRESENTED BY: Two of the dominant themes for tenants today are longer leases and increased construction costs, Vos says. “The capital requirements Office Rental Rates, GOLD SPONSORS: to build out new space is forcing Fourth Quarter 2017 everybody to think about a lon- n Average net rental rate for ger lease term. The incentive to spend that money is really to at- office space, Twin Cities: tract talent,” Vos says. “Ten years $15.16 per square foot ago, the cost to build out space n was $30 to $40 [per square foot]. Average costs for operating Today a lot of people spend $70 expenses and taxes, Twin Cities: [per square foot] without think- $11.72 per square foot RECEPTION SPONSOR: ing about it.” Longer lease terms can n Downtown Minneapolis, overall translate into more incentives average net rent: from building owners. Vos says $16.90 per square foot that in some cases he has seen landlords offering a year of free n Downtown St. Paul, overall rent on a 10-year lease. Vos notes average net rent:

that the trend for companies to $11.32 per square foot PAUL MINNEAPOLIS-ST. SOURCE: CUSHMAN & WAKEFIELD

48 TWIN CITIES BUSINESS tcbmag.com APRIL 2018 Imagining new possibilities. Creating lasting communities.

Office Space Trends for 2018 Tenants Commercial real estate with a proven past and future focus

1} Construction costs have increased steeply A big consideration for companies weighing a potential move is that the costs of building out new offices have increased sharply in recent UPROPERTIES.COM MINNEAPOLIS DENVER years. But many companies are willing to foot the bill for fresh, modern, appealing work environments.

2} It’s tough to find deals in the best buildings Yes, office vacancy rates are historically high. In theory, that’s good news for tenants shopping for competitive proposals for potential office space. But the lowest rental rates will likely be found in aging buildings 2018 Nonproﬁ t Event Calendar where the landlord has not invested in upgrades and improvements. Is cheaper rent worth the tradeoff for less inviting offices? April 8 | Sunday | YWCA 3} Longer lease terms are becoming more common Minneapolis Indoor Triathlon #4 Whereas three- to five-year lease terms used to be commonplace, Swim, bike and run indoors—complete an indoor triathlon! Compete as an individual or as part of a relay team. April 8 at Midtown. brokers say that it’s now routine for companies to sign seven- to 10-year ywcampls.org/events/all_events/indoor_triathlon_4/ deals. One factor: If companies are paying more on the front end to build out the space they want, it makes sense to settle in for a longer stay. 26 | ursday | Catholic Community Foundation Landlords are also more inclined to offer some incentives for tenants e Catholic Community Foundation of Minnesota Celebrates 25 Years Come to the table om 6 p.m. to 9 p.m. on ursday, April 26, to celebrate making a long-term commitment. the community impact made possible by collective, Catholic philanthropy. ccf-mn.org/25th/ 4} Landlords are offering more generous tenant improvement packages May Landlords have been increasing tenant improvement allowances in 4 | Friday | Catholic Charities of St. Paul and Minneapolis recent years, which can help offset the higher cost of construction for 2018 Dorothy Day Community Breakfast tenants. A tenant improvement allowance essentially reimburses a A community breakfast celebrating 37 years of providing critical services to those in need, and creating a strong, vital community where there is poverty tenant for some of the project costs. But companies may need to sign for no one and opportunity for everyone. Join us at Saint Paul RiverCentre longer-term leases to get larger allowances. Jargon alert: Commercial om 7 a.m. to 9 a.m. real estate professionals often refer to tenant improvements as “TIs.” cctwincities.org/breakfast

4 | Friday | MN Adult & Teen Challenge 5} Companies now see office space as a key 25th Annual Gala component for attracting and retaining employees Join Minnesota Adult & Teen Challenge for their 25th Annual Gala featuring Real estate used to be seen as a line item on the budget: The company P.J. Fleck and the MnTC choir. Beginning at 5:30 p.m. there will be a silent needs to spend X dollars to rent its office space. Today, businesses are auction, dinner and program. Register today! looking for inviting venues and amenities that can reflect the company’s mntc.org/event/minneapolis-gala-featuring-guest-speaker-p-j- eck/ culture and help attract and retain employees.

APRIL 2018 tcbmag.com TWIN CITIES BUSINESS 49 TRENDING | COMMERCIAL REAL ESTATE

How Much Is This Going to Cost? A tenant’s market Minneapolis than it is elsewhere,” Den- “It’s still a tenant’s market,” says Bar- ham says. he cost of renting an office starts with the net rental rate. bara Byrne Denham, a senior econo- But tenants may have to sign longer- The net rental rate is what you pay per square foot leased mist with REIS. term leases to get some extras. Brokers say T “The office market in this expansion that landlords are offering richer tenant per year. For example, a net rental rate of $15 per square foot hasn’t been that robust. Employers are improvement allowances, which can help for 5,000 square feet of office space translates to$75,000 in just more conservative with how much offset the costs of renovating and upgrad- annual rent, or $6,250 per month. space they lease.” ing the interior space. There may be some room to negotiate the quoted net Denham notes that REIS reported Construction costs are rising, “so for a rental rate. the office vacancy rate for Minneapolis tenant to get a decent tenant improvement “There’s always a little bit of flexibility,” says Mike Brehm, a vice at 16.1 percent for the fourth quarter of allowance from the landlord, they need to president with the local office of Toronto-based Colliers International. 2016, but the rate climbed to 17 percent sign a longer-term lease,” says Mike Brehm, during 2017. a vice president with the local office of But he notes that while owners of older buildings without recent “It is more so a tenant’s market in Toronto-based Colliers International. improvements might be more inclined to haggle, landlords of newer But not everyone wants an open properties are less likely to budge on quoted rates. office. Brehm notes that he has started to But the net rental rate doesn’t include everything. Tenants also see some resistance to the recent trend pay costs for operating expenses and taxes, which are essentially of open office design. One common passed along from the landlord to tenants. If operating expenses complaint is that open office designs can and taxes are $11 per square foot, that adds another $55,000 a make it harder for employees to concen- year for 5,000 square feet of space. The gross rent would then be trate because they are closer together and have less space of their own. $26 per square foot, or $130,000 a year, which does not include “There has been a little backlash,” any tenant improvements to the space. Brehm says. “It’s definitely a science on There can be big variations between rates depending on how much open, collaborative space location. The average net rental rate in downtown Minneapolis, you want.” tcbmag for example, is almost 50 percent higher than it is in downtown St. Paul. Burl Gilyard is TCB’s senior writer.

Business Intelligence Empowering Strategy

SAVE THE DATE! Wednesday, May 23 at the Metropolitan Ballroom 2:45 pm - 6:00 pm // Panel Discussion & Networking Cocktail Reception

Join us to hear about how some of Minnesota’s most successful businesses use data and analytics to accelerate and manage their overall strategic plan. Discover how by embracing a data-driven culture they use technology and key performance indicators to achieve their organizational plan goals and increase the value of their business. Register at tcbmag.com/SBSR1

Presented By: Media Partner:

50 TWIN CITIES BUSINESS tcbmag.com APRIL 2018 Callin all Minnesota Entrepreneurs

Any Industry Any Stage Free to Enter. The 14th season of the MN Cup competition is here! With nine divisions and a collection of judges and mentors that will knock your socks off, we're offering the resources, publicity and cash prizes that can take your startup idea to the next level. Nearly $500,000 in cash prizes will be awarded to Minnesota Startups with less than $1 million of annual revenue, and no equity taken.

Apply with your innovative idea at mncup.org by April 27. TRENDING | MARKETING

The Human Connection In a technology-driven world, 10 Twin Cities marketing agencies recommend how to break through the communications clutter.

By Gene Rebeck

or creative marketing agencies and their clients, technology has all businesses are looking to connect with new customers or strengthen the con- been both a boon and a bane. The digital realm has opened up new nections they have with existing ones. markets and ways to reach potential customers. “Artificial intelligence and data can take you only so far,” says Joe Monnens, It’s given marketers and clients ever-improving tools for under- executive creative director at ICF Olson. “The human element is what makes standing and reaching buyers and consumers. Personalized mail, marketing relevant to people.” Margaret Murphy, CEO and founder of a new social media, retargeting, artificial intelligence (AI) and big data are agency called Bold Orange, observes that “technology developments have done providing new insights into the buying process. away with the personal touch. The next moves will be to add human interac- FBut the online marketplace also presents challenges. There are so many tions back into the mix.” messages out there that it can give companies the illusion that they know more In other words, traditional advertising has become just one of the options about their market than they really do. Turmoil in the retail arena is one prominent creative marketing agencies can use to help clients build business and brand aware- example. Once-invincible stores are forced to reinvent themselves for the digital ness. Events, printed materials, in-store experiences, products and online content consumer or risk bankruptcy. are all in the toolbox. TCB asked leaders at 10 Minneapolis-based agencies what Talk to local marketing agencies and the main challenge most will bring up is strategies they recommend and trends they see for this year. They offered the fol- this: How to make human connections in a technology-driven marketplace. Nearly lowing insights for businesses.

Murphy, a former president of Minneapolis agency ICF Olson, officially launched Bold Orange early this year. Her goal: “Modernizing the loyalty and customer relationship management (CRM) industry. Brands want more personalized and one-to- one communications, but the industry is anchored in points, programs and transactional emails.” Look to Murphy’s agency to focus on new approaches to customer loyalty programs, her area of creative expertise.

Strategies Trends n Create personalized moments of meaning—blend common sense, n Augmented reality becomes more mainstream insight, creativity and technology to reach people in their fullest and it becomes social. context in an engaging way. n We’ll see a renewed focus on the planning and designing of n Make every interaction feel right, easy and welcomed. triggered communications with more common sense. Margaret Murphy n Create a road map to streamline your infrastructure costs and shift n The renaissance of the personal touch. Recently, technology CEO and Founder budget dollars into more of what the consumer sees and feels. developments have done away with the personal touch. The next Bold Orange moves will be to add human interactions back into the mix. n Nonprofit loyalty will take on new meaning.

52 TWIN CITIES BUSINESS tcbmag.com APRIL 2018 Build. Grow. Marty Senn Chief creative officer and managing partner Carmichael Lynch Protect. “We call ourselves full- service, which really just means ‘we do all of the things,’ ” Senn says. That includes creative, strategy, public relations, social, data and analytics, and all manner of production. Its clients include Subaru, U.S. Bank and Jack Link’s.

Strategies There’s no set playbook that we trot out for our partners, and no one-size- fits-all solution. We really rally around what their unique challenges and opportunities are and look to We build, grow and protect brands and reputations worldwide see how we can creatively through public relations, advertising, digital and social marketing, give them an unfair advan- investor relations and brand strategy. Let us show you how to tage in the marketplace. connect with purpose at PadillaCo.com. Trends Brands are talking a lot more about purpose and their mission, looking to connect with people on a values level. And while certainly not a new trend, how brands connect with people on their phones will get smarter and smarter and be more relevant than ever.

APRIL 2018 tcbmag.com TWIN CITIES BUSINESS 53 TRENDING | MARKETING

Christine Fruechte Doug deGrood CEO Creative director Colle McVoy Gabriel deGrood Bendt (GdB) Wells Fargo presents

Colle McVoy is best known GdB doesn’t specialize in a st for its integrated market- particular industry. Summit 1 Tuesday ing work in the agribusiness, food Brewing, Park Dental and Anytime and beverage, pet care and travel Fitness are in its client portfolio, which DINE, NETWORK, AND LEARN WITH RENOWNED industries, though it also has clients is roughly two-thirds in Minnesota, BUSINESS AND COMMUNITY LEADERS. in travel, outdoor lifestyle and one-third out of state. GdB is now part health. Its mix of local, national and of Clear Night, a group of Minneapo- international clients includes 3M, lis marketing agencies that includes Land O’Lakes and Hershey. Ackmann & Dickenson and Modern Climate. APRIL 3 • 2018 Strategies n The moment brands stop seek- Strategies ing what’s next, growth or even Today there might be a need for native survival for that matter, they are advertising or event marketing or a at risk. virtual reality (VR) strategy. Tomor- n Don’t think “path to purchase.” row, who knows? We’re holistic, idea- Think “ease to purchase.” It’s all first marketers. It’s still about brands about making things simple, fast engaging people—not consumers, and intuitive. people—with the right message or n Mix things up. In a sea of tried- content at the right time. There’s so and-true strategies and tactics, much “me too” content and noise out DEB TAYLOR creativity can be a true differen- there that people are going ad-blind. CEO tiator. Taylor Corporation n Bring your brand to life in the Trends total consumer experience— I see a return to breakthrough, 11:30 a.m. – 1:00 p.m. everything you make, do and say. memorable campaign ideas. Data and retargeting have consumed much of McNamara Alumni Center, our industry’s attention over the past University of Minnesota Trends several years. That work is important Issues regarding digital transforma- and will obviously continue. But I For more information and to register visit: tion, transparency, AI, data and au- think we forgot that we’re talking to z.umn.edu/FirstTuesday tomation will continue to vex brand unpredictable, emotionally driven marketers. Based on this, marketers human beings. People are inspired by should: brands that tell insightful, cool stories. n Create differentiating customer Facts aren’t enough. The 1st Tuesday Speaker Series convenes Twin Cities’ professionals experiences. to address hot topics in business, management, and leadership. A n Harness the power of empow- Carlson School tradition since 1992, the monthly event is one of the ered machines and partner with largest gatherings of corporate and community leaders in the area. digital platforms to influence consumer behavior. Presented by n Make brands more human-like.

54 TWIN CITIES BUSINESS tcbmag.com APRIL 2018 Join us as we bring together leading business Joe Monnens Joe Cecere women and men for a discussion about what is and Executive creative director President and chief creative officer ICF Olson Little & Co. is not working when it comes to increasing women in corporate leadership, overcoming and eliminating gender obstacles, navigating career choices and shaping healthier business environments. From its founding as a tiny Little is an independent shop a quarter-century design and branding agency PANELISTS ago, ICF Olson is now Minnesota’s specializing in brand strategy, identity largest agency, with 800 employees and naming, communications cam- Kweilin Andrew in 14 offices in the U.S., Canada and paigns, employee engagement and Ellingrud Humphrey India. Its services include advertis- experience design. Clients include Partner Partner and Chair ing and public relations, loyalty Target, U.S. Bank, Gap and Habitat for McKinsey & Emeritus programs, customer relationship Humanity International. Company Faegre Baker marketing (CRM) and social media. Daniels LLP Its regional and national clients have Strategies included Amtrak, Target and Bauer When people are watching more than Cindy Kent Beth Wozniak hockey equipment. ever, your brand has an opportunity to share a story that is uniquely yours. President & SVP & President Strategies Discover the heart and soul of your General Manager Electrical 3M Infection Pentair We talk to our partners about how organization and share it in a way that Prevention their brand needs to create impact, authentically engages your employ- Division while making experiences that are ees and customers. Try something engaging, helpful and memorable. new. Just make sure it’s right for your It’s not about the impressions—it’s brand and bring it to life at every Hyatt Regency Minneapolis about making an impression. Our touch point. 1300 Nicollet Mall Minneapolis, MN 55402 goal is to help our clients immerse $75 per ticket | $750 per table Trends themselves in the day-to-day needs *Corporate Sponsor Tables available. of their core audience so that we can People are going to make buying drive cultural moments that matter, decisions based on what a company Registration & Networking 11:00 am big and small. stands for, now more than ever. That Lunch 11:30 am kind of attitude creates a big opportu- Trends nity for brands looking to shift their Program & Panel Discussion 12:00pm - 1:30 pm As cause marketing and transparen- customer perceptions for the better. cy become more important, brands The positive twist you take on what’s need to show that they’re here for the happening in our culture is key to TUESDAY | APRIL 10, 2018 greater good. Voice will give a more standing out. emotional mindset to narrative this year, and we’ll continue to home in PRESENTED BY: on how we utilize it in ways that are genuinely helpful.

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APRIL 2018 tcbmag.com TWIN CITIES BUSINESS 55 TRENDING | MARKETING

Jim Scott Matt Kucharski 2018: Where are Co-founder and managing partner President We in the Cycle? Mono Padilla

This Uptown Minneapolis Once solely a public shop, whose capabilities relations shop, Padilla include advertising, social media, now includes advertising, marketing digital content and design, is grow- strategy and social/digital marketing ing beyond its original “boutique” in its mix. It currently has seven of- moniker thanks to a recently opened fices across the U.S., serving clients in second office in San Francisco. Clients food, health, agribusiness, manufac- include Google, Walmart and Krave turing, technology, financial services snacks. and other industries. These include Bayer, Xcel Energy and Mayo Clinic. Strategies Traditional marketing objectives Strategies of awareness and preference are no Business strategy drives marketing Industry leaders share how they’re thriving in a rapidly longer enough to drive growth. We’re strategy, and marketing strategy placing our emphasis on utilizing drives creative strategy; it can’t be the changing market with rising land and construction costs, data analysis and strategic rigor to other way around. We’re advising our higher interest rates, rising retail bankruptcies, the truly understand consumer behavior clients to be “strategically creative” by to inform our creative development. making sure that creative ideas and ba le of higher density vs. NIMBY and more. We marry this with the right balance approaches are based on research and of emotionally resonant creative de- insights. That might sound a little livered to the right people at the right bit boring, but truly great marketing Save the Date! PANELISTS time in order to build preference and strategies don’t just grab attention; Spencer Finseth drive action. they transform the business. ursday, May 3 Principal Greiner Construction Trends Trends 2:45 PM Registration Michael Hille There will be a continuation of the There are real opportunities around 3:00 PM Panel Discussion Executive Vice President rapid pace of change within the media continued sophistication in influ- Kraus-Anderson landscape, led by the growing power encer marketing—the idea that we 4:30 PM Networking Reception of social media and shift to mobile de- as consumers are more likely to seek Mike Ohmes 6:00 PM Event Concludes vices. We believe this complexity will advice from people we trust vs. the Managing Principal Cushman & Wake eld only increase the pressure on brands brands themselves. Ironically that’s Loews Minneapolis Hotel to focus on a singular, simple message the foundation of public relations. 601 N First Ave, Minneapolis Ma Rauenhorst that can translate across any medium. I also see increased momentum for Vice President stakeholder mapping—understand- TICKET INFORMATION Real Estate Development ing which people are truly important $60 per ticket • $480 per table of 8 e Opus Group to your success and determining the Bob Solfelt Register Today best way to build a network around Senior Vice President, them. tcbmag.com/CRE18 Mortenson Development

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56 TWIN CITIES BUSINESS tcbmag.com APRIL 2018 T:4.5625”

Liz Ross Marcia Miller President and CEO President Periscope StoneArch

Ross describes Periscope StoneArch specializes in as “a creative agency that health marketing for clients can help brands reach connected in pharmaceuticals, medical technol- consumers and make sure that the ogy and health insurance, among messaging feels consistent at every others. Services include brand strategy, touch point.” It has offices in Minne- creative, content development and apolis, Chicago, Delhi, Toronto and digital for local and national clients Hong Kong, and a client portfolio including Medtronic and ProVation. that includes the Minnesota Twins, Great Clips and DreamWorks. Strategies We wouldn’t begin to assume that Strategies one marketing strategy fits for all of T:10.75” We are focusing our clients on do- our clients. We work hard to make FRIDAY APRIL ing things, not just ads, that actual sure that the work we do is personal, 13 people love. This means a focus on authentic and aligned to the unique- utility and content that is engaging ness of each client and each business and unique. We are busy reinventing challenge. The focused work we do DON’T MISS THIS TALK ABOUT “HOW INSPIRATION MAKES ANYBODY retail, turning packaging into a digital within the health industry helps us to DO ANYTHING” BY MICHAEL FANUELE, CURRENT CEO OF TALK LIKE MUSIC experience and connecting with uncover trends in marketing strategies AND FORMER CCO OF GENERAL MILLS. people in new and different ways. and pass those insights along to our We always advise our clients to push clients. harder and fail faster. SCHEDULE Trends Breakfast 7:30am | Program 8:00am | Q&A 9:00-9:30am Trends The one that we’re most passionate The most interesting marketing about is the continued trend around LOCATION trends will be the evolution of voice content creation and distribution— 3M Auditorium, Carlson School of Management as a user interface, the focus on the especially inside of the health space. University of Minnesota, 321 19th Ave. S., Minneapolis, MN in-store retail experience and the Consumers and providers will con- evolution beyond the app. All three tinue to turn to digital channels for of these are different but intercon- content. But they have very different RSVP COST nected and speak to our increased needs from both a practical and By Wednesday, April 11th at Admission + Parking desire as people to connect. Tech- emotional perspective that must CarlsonSchool.Umn.Edu/BrandMatters is $25 nology is becoming more human, be considered when creating that and humans are more accepting of content. tcbmag technology. Gene Rebeck is a Duluth-based FOR MORE INFORMATION, VISIT GO-YAMAMOTO.COM/NEWS freelance journalist who writes monthly for Twin Cities Business.

APRIL 2018 tcbmag.com TWIN CITIES BUSINESS 57

Production 15337-1_BM_Fanuele_HalfPgAd_022118.indd print scale None Round 1F printed 2-21-2018 6:22 PM page 1 of 1 location Creative:Brand_Matters:15537_2018_Brand_Matters:15537-1_Brand_Matters_Fanuele:Production:FINAL:15337-1_BM_Fanu- saved 2-21-2018 6:21 PM ele_HalfPgAd_022118 by Stephanie Hiatt JOB INFO AGENCY CREDITS COLORS – FONTS – IMAGES Job 15337 Account Director None Colors: Cyan, Magenta, Yellow, Black Client Brand Matters Account Manager McCall Ashton Fonts: Trade Gothic (Bold Condensed No. 20, Condensed No. 18) Media Type 1/2 Pg Print Ad Creative Director Andy Thieman Images: Stop_BrandMatters_02_Edited-4C.psd (CMYK; 342 ppi; 87.62%), BM_LogoFat_2014_rev.eps Color 4C Art Director/Designer Meky Wong (31.17%), YAMAMOTO_Logo_Rev.eps (8.15%), CSM_Wrdmrk_rev.eps (19.6%), TCB_new_logo_rev. eps (7.38%) Description Michael Fanuele Ad Copywriter Brenna Pileggi Project Management Kelly Bellini/Deborah Live 4.5625” x 10.75” Mac Artist steph hiatt Trim 4.5625” x 10.75” Bleed 4.5625” x 10.75” Folded None IMAGE INFORMATION NOTES (scaling, special instructions, etc.) CC 2015 Pubs Twin Cities Business Required Final Resolution 300 ppi None Usage None TRENDING | WORKFORCE

Casting A Wider Net Minnesota companies need to look beyond their comfort zones to attract workers in a competitive marketplace. By Fran Howard

win Cities-area companies need to be creative when it comes to recruiting and retaining an increasingly diverse workforce. TMinnesota’s unemployment rate of 3.1 percent is among the lowest in the nation. In addition, tectonic shifts are occurring in the demographics of Minne- sota’s workforce. Though many baby boomers are staying in the workforce longer, they are nonetheless retiring at a rapid clip. Between 2011 and 2015, the number of white Minnesota workers who were born in the United States declined, according to U.S. Census Bureau statistics. Meanwhile, two groups of Minnesota workers expanded over that same period—foreign-born residents and people of color born in the United States. “We are certainly seeing the impact of the demographic shift that has been going on for decades,” says Steve Hine, research director of the Labor Market Information Office at the Minnesota Department of Employment and Economic Development (DEED). “Employers need to adapt their behavior.” For decades, women joined the workforce in droves and baby boomers provided a huge influx of workers. Businesses didn’t have to work hard to attract candidates for positions they were trying to fill. That has changed, and concern is growing, according to Susan Brower, Minnesota state demographer. Five years ago, Twin Cities companies were skeptical that talent would become increasingly difficult to find, due to the lingering impact of the Great Recession. “Now employers have fewer applicants for each job posting than they did five years ago,” Brower notes. “Employers are coming to terms with the reality of what this all means.” Demand for workers in the 16-county Twin Cities metro area is high, while Brower says “the trend in slower labor force growth will continue.” Minnesota, like other Midwestern states, tends to lose workers to other states but gains workers due to immigration from other countries. Between April 2010 and July 2016, 80,206 foreign nationals immigrated to Minnesota, while 38,178 Min- nesotans moved to other states, for a net gain of 42,028 people, according to data from the U.S. Census Bureau. This immigration is changing the complexion of the

ALEX NABAUM state’s population and workforce. In 1960, fewer than

58 TWIN CITIES BUSINESS tcbmag.com APRIL 2018 100,000 people of color lived in Minne- Between 2014 and 2016, Minnesota’s Role of international Hine agrees. “Even in the best of sota. Today, there are 1 million people of labor force grew by a net 31,000, and 92.6 immigrants circumstances, even without a significant color—nearly one in every five residents. percent of them were from populations Because baby boomer retirements are reduction in the number of immigrants “Basically, older white workers are being of color, both foreign born and native unfolding across the country, multiple allowed into the United States and replaced by younger, more diverse people born, Hine says. And Brower notes that metro areas must adapt to this trend, say Minnesota, and even if we can solve the moving into the workforce,” Brower between 2010 and 2016, the share of the Brower and Hine. “Recruiting talent will racial imbalances that exist in terms of notes. That diversity, while mostly refer- working-age population in Minnesota be vitally important to companies’ suc- educational advancement and opportu- ring to race and ethnicity, also includes represented by people of color grew from cess in the next five to 10 years,” Brower nities in the job market, we are still going sexual orientation, religion and people 22 percent to 26 percent. says. Many businesses are worried a labor to see a dramatic decrease in the rate of with various disabilities. Flexibility will be key for compa- shortage will restrict their ability to grow. growth in the labor market,” Hine says. nies that want to successfully compete “Minnesota companies have begun re- “At current labor force projections, busi- Fewer new workers for workers in the labor pool. Life-work cruiting from other states, but it is going nesses will have to change their priorities Despite the effect of immigration and balance issues need to be considered, to be tough,” she says. “If people are com- if they are going to successfully compete growth in the overall state population, and workers in low-paying jobs might fortable at home and have opportunities for a shrinking pool of candidates, and the flow of people into Minnesota’s need a hand up. “Transportation and in their home state, it makes it much those who expect to look to the native- workforce has slowed dramatically. child care are huge impediments to harder to recruit them. Other states are in born white population to fill demand Between 1980 and 2000, Minnesota’s people being able to take jobs,” Hine the same situation we are.” will really have a hard time.” labor force expanded—on average—by says. “You can’t pay for child care on a The other option—recruiting from 40,000 to 54,000 people a year. That an- minimum-wage job.” And many new outside the United States—holds more Diversifying workforces nual average growth dropped to 21,000 immigrants don’t own cars, he says, promise, but it too has its challenges. Diversifying a company’s workforce and between 2010 and 2015, and is expected which means employers need to be Brower says that future growth in the creating a corporate culture of inclu- to be only 7,000 more workers a year creative. For instance, Amazon sends state’s workforce will come largely from siveness is an approach with business between 2015 and 2020. Slow growth buses every day to Minneapolis’ Cedar- international immigration. “If the level advantages. First, companies will be more of just 6,000 workers a year is projected Riverside neighborhood to shuttle of immigration slows due to federal competitive in recruiting talent from the by the Minnesota State Demographic workers, primarily Somali-Americans, regulation, it would be easy to see a very shrinking and increasingly diverse labor Center for the 2020 to 2030 period. Many to the company’s fulfillment center in quick decline in the state’s labor force,” pool. Second, as the consumer base be- new workers will be people of color. Shakopee. she notes. comes more diverse, companies will have 49 YEARS in the Twin Cities

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APRIL 2018 tcbmag.com TWIN CITIES BUSINESS 59 TRENDING | WORKFORCE the in-house skills and talent they need to Populations of Color inclusive, the firm likely will not be able connect with their customer bases. Third, Driving Growth in Minnesota to retain those workers. If the corporate worker productivity will improve. culture is not one of inclusion, workers of Minnesota’s white population grew by 2 percent over a recent Make It. MSP. is an initiative of color tend to disengage, may start show- 15-year period. Asian, black, Hispanic and multiracial popula- Greater MSP, the Minneapolis-Saint ing up for work late, and ultimately leave tions expanded rapidly—increasing by 80 to 96 percent. Paul Regional Economic Development the organization, Ali says. Partnership, and others. It is working Population Change, 2000-2015 To create an atmosphere of inclusion, with companies to help recruit and companies first need to recognize biases White 93,100 (2%) retain new workers for the area. “In and admit there is a problem. Ali suggests the 16-county metro area, we could be Black 140,900 (80%) giving employees, particularly those more 128,500 workers short by 2020 of what Hispanic 138,900 (96%) resistant to change, the Implicit Associa- our economy demands. We have more Asian 118,400 (81%) tions Test, and then, if needed, bring in economic opportunities than people,” Multiracial 57,900 (99%) a consultant for diversity training. “The says Peter Frosch, vice president of strate- American Indian 6,100 (12%) challenge with diversity training is that gic partnerships for Greater MSP. About Hawaiian/Pl 600 (36%) effectiveness is low, which corresponds one-third of those 128,500 positions will with individuals being ready to accept require high-skilled workers. Census Bureau SOURCE: U.S. 0 30000 60000 90000 120000 150000 and implement some of the things diver- Over the next decade, Minnesota sity training recommends,” he says. DEED projects that jobs will open for more than 10,000 teachers; 10,000 Buy-in at the top financial managers, accountants and Welcoming newcomers cally has his or her new position under “It has to be a top-down effort,” Ali says. auditors; and 2,500 medical and health But maximizing the current labor force control and wants to get involved in “What is leadership doing to foster an service managers. is only part of the overall solution, the community. “Invite them to your inclusive atmosphere? If leaders take a Moreover, many Minnesotans because growth in the labor force will home, your place of worship, a com- stand, there will be challenges and some between the ages of 25 and 44 started come increasingly from international munity event, or just to do something resistance, but with top-down support, but never finished their college degrees. immigration. While many Minnesotans after work,” Frosch says. Retention over time that organization will become A new program, St. Kate’s Complete, will pride themselves on being “Minnesota of professionals of color has proven more inclusive.” Inclusiveness allows allow companies to eventually tap into nice,” they need to be better at welcom- particularly challenging for Minnesota people to show different aspects of them- this population by providing students ing newcomers to the state, experts say. businesses. “They move to and leave the selves at work, through flexible dress and from diverse backgrounds and those “We need to increase the percentage MSP region at higher rates than white behavior codes, such as allowing Muslim facing economic hardship greater access of people who stay. It is not a choice professionals,” he notes. “They come for employees space and time to pray, trans- to programs offered at St. Catherine Uni- between attraction and retention. It has economic opportunity and leave be- gender workers use of identity-appropri- versity. The St. Kate’s Complete program to be about both,” Frosch says. It’s like cause they didn’t find the connections ate bathrooms, single parents and older allows graduates of Saint Paul College or the “Start seeing motorcycles” bumper they were looking for.” workers flexible hours, and ergonomic Minneapolis Technical and Community sticker, he adds—Minnesotans need to Abdifatah Ali, a post-doctoral alternatives to sitting at a desk all day for College to complete a four-year degree in start seeing newcomers. research fellow at the Carlson School of those who are physically challenged. as little as 24 months. After six months, a newcomer typi- Management’s Department of Work and “Inclusive climates have less conflict Organizations, has dedicated his career and tension, allowing people’s differences to studying how companies can be suc- and talents to really come to light and cessful as their workforce increasingly di- shine,” Ali says. “The growing evidence versifies. It isn’t easy. “Organizations and is that an inclusive climate affects the Net Migration for Midwestern States people in leadership first need to develop bottom line. When individuals are in an a diversity objective. Why do they want organization where their identity is being Midwestern states tend to lose residents to other states on net, but gain residents from to be diverse? If the organization cannot respected and they are valued for their abroad. The following are estimates from the U.S. Census Bureau. answer why, it will continue to have a differences, the company can leverage problem,” he says. those differences.” April 2010 to July 2016 (Cumulative) Once a company has defined its A recent study by researchers at Net Migration diversity objectives, it needs to review its Rutgers University and the University Total International Domestic human resources practices. Are people of of Houston found that as a large U.S. color and those with disabilities and oth- retailer rose on a diversity scale, black North Dakota 56,271 9,475 46,796 er differences afforded the same pay and and Hispanic employees throughout Minnesota 42,028 80,206 -38,178 opportunities as their white—sometimes 743 of the company’s stores performed Iowa 24,643 35,326 -10,683 white male—counterparts? “If people of better. For part-time black associates, South Dakota 21,072 9,563 11,509 color look up the corporate ladder and sales per worker increased $20 per hour Nebraska 14,572 24,303 -9,731 don’t see anyone that looks like them, it or $20,000 per year as the company tells them a lot about their future with became more diverse and inclusive. Indiana 4,511 63,671 -59,160 that company,” Frosch notes. “Promotion Sales per part-time Hispanic workers Missouri -6,804 51,332 -58,136 of people of color is a commitment that rose $27,000 per year per worker. “The Wisconsin -20,083 43,853 -63,936 needs to be sustained.” employees were happier, more satisfied, Kansas -34,632 35,867 -70,499 A company might do a fantastic job more engaged and more committed,” Ohio -70,390 112,592 -182,982 marketing to diverse candidates through Ali says. tcbmag Michigan -87,519 128,353 -215,872 its website and company brochures that show images of people of color, but if Fran Howard is a St. Paul-based editor Illinois -361,646 178,520 -540,166 SOURCE: U.S. Census Bureau SOURCE: U.S. the culture within the company is not and writer.

60 TWIN CITIES BUSINESS tcbmag.com APRIL 2018 SPONSORED CONTENT Belief (4–6 months) Believes they can make a difference | Believes HOW TO CREATE they can be an ambassador of the company Delivery (9–12 months) AN ENVIABLE Actively delivers on the company culture | Recognized and rewarded for success | COMPANY CULTURE. Convinces others to become ambassadors for the company | Changes behavior

NOW IT’S TIME TO REINFORCE AND REWARD. Hands down, you have to practice what you preach. If you’re talking culture, purpose, and values, you need a clear system in place to Company culture is a hot topic among We believe our business will continue to reinforce and recognize those that uphold leadership teams across the country. Like grow with the right people, working in and carry them forward. We have three levels many others, we’re working hard to create a the right way with our purpose in mind. of rewards. culture that’s consistent and high-performing. We ask a lot of questions, challenge each Our culture is based on a well-socialized “Y-5s” are handwritten notes given other, collaborate, and push for a better value system that has become the root of our Yamamotoan to Yamamotoan as answer as a normal course of business. mindset and behavior. recognition for hard work. We vote quarterly for someone who Do you ever wonder how companies like PEOPLE, PEOPLE, PEOPLE. We believe all voices matter. To have a pushes us all to the next level. The Google and Zappos developed their cultures? fully engaged culture, you must stay open “Get Sh** Done” award is given out at an Here are a few things to think about when to new inputs and adapt to meet the all-company meeting. It’s honored with developing your company’s culture. organization’s needs. an oversized necklace, roving desktop trophy, and financial incentive. IT ALL STARTS WITH SHARED VALUES. We ask our new employees to write down Strong cultures have behavior systems that are Our year-end “Pinnacle Award” their thoughts over the course of their first both clearly outlined and aligned with their celebrates—with a monetary incentive— 30 days here: what they like, don’t like, would strategy, operations, and human resources. the one person who makes us better do differently. This gives us an opportunity to each day and moves mountains for Our values are represented in each one learn and improve, frequently. our clients. of our presentations, job descriptions, performance reviews, incentive programs, Annual engagement surveys are a great way and interactions with clients. to learn what is and isn’t working. They have In 2017, Yamamoto had its highest revenue helped us evolve into a full-service creative of the last 11 years, hired 12 new people, and We rally around the ideals that are most agency which won a spot in “Best Places won a “Best Places to Work” award. meaningful to us. This makes them a to Work 2017” by the Minneapolis/St. Paul foundation that differentiates us in Business Journal. the market. SO WHAT’S THE BOTTOM LINE? Having a strong culture isn’t just about If you do a survey, you have to follow through. WE BELIEVE IN THREE Cs: freebies and amazing benefits for your Present the findings publicly, employees. When done properly, it’s talk about what you learned CURIOUS We never stop learning or exploring. a comprehensive, thoughtful strategy and what you’ll do to address CREATIVE We light up the room with engaging imagination. that works to successfully attract and priority topics. Without this, COURAGEOUS We are fearless and are up for any challenge. retain employees, boost productivity, the process is pointless. give your brand a voice, win and keep clients, and ultimately increase revenue. DRILL DOWN TO REVEAL Employee engagement doesn’t happen I truly believe it’s the cornerstone of our A CLEAR PURPOSE. overnight. What begins with changing success at Yamamoto. Culture and leadership are inextricably attitudes ends with inspiring and linked. We have strategic initiatives around affecting behavior. culture. It is a pillar of our annual plan, GO-YAMAMOTO.COM/CULTURE complete with scorecard measures and Awareness (Day 1) leadership accountability. Understands the company | Understands their role and benefits of the company| The way we learn, train, work, and Understands emphasis on delivering the represent ourselves always reinforces right experience KATHY MCCUSKEY our purpose: Moving mountains for Chief Executive Officer clients. This alignment is critical to team Knowledge (Day 30) Familiar with the strategy Familiar with the Yamamoto engagement and consistency in our | right company experiences Knows what approach, process, and client experience. | expected behavior is Our Next Bold North Move Dynamic cities are developing innovation districts.

s a board member on a variety of Twin Cities civic pared before the innovators come to work. In downtown FRONT LINES organizations such as Greater MSP, I am always Detroit, for example, Quicken Loans led the way, plunking by Ravi Norman struck by the seriousness of intent demonstrated its headquarters into the heart of a city seen by many as Aby my fellow board members—many of them CEOs of terminally maimed by the collapse of industrial America. other leading companies—in addressing the challenges The move sparked a true renaissance in Detroit, unleash- of workforce development and capacity-building for our ing a wave of creative entrepreneurial energy to fuel the regional economy. city’s comeback. Quicken, with its bold move, set a tone and Even now, basking in the afterglow of the Super Bowl raised expectations for the entire city. festivities, local leaders are focused on the future: What The Quicken example shows the power—and neces- comes next in terms of maintaining our regional competi- sity—of a private-sector anchor point for the success of an tiveness in a world marked by ever-increasing econom- innovation district. The goal of these districts is to foster ic, social and political change? sustainable business ventures—based on innovative ideas Key among our region’s challenges are factors and approaches—with local job creation as a byproduct. To such as the rapidly changing demographics of our that end, the public and private sectors must work hand- working-age population, the return of industry to in-hand to set the conditions for a combination of diverse the urban core and increased interest in tighten- entrepreneurial interests in one tight-knit community. ing the industrial supply chain across all business So what does an innovation district look like? It should be: segments. n Geographically compact. In other words, we have to work harder than ever n Transit-accessible. to sharpen and reshape our regional competitive- n Technologically wired. ness to keep up in the global, technologically fueled n A mixed-use built environment: office, industrial, retail, economy. housing. Our region is not alone in grappling with these changes, n Educationally diverse; even in technologically focused I can think of no more but it is incumbent upon we who live here to deal with innovation districts, the workforce typically breaks down them. And I can think of no more pressing issue facing us as 40 percent of people with high school or associate pressing issue facing us than that of workforce capacity-building. The talent short- degrees, 40 percent with four-year college degrees, and than workforce capacity- age that many predict will hit the Twin Cities in the near 20 percent with advanced degrees. building. The talent shortage future is not something to take lightly. We have time, now, And there needs to be a starter culture in place, as in the that many predict will hit to plan how to address it, and I believe we have the answers Detroit example: an anchor business or institution serving the Twin Cities in the near within our grasp, too. as the center point to an ever-expanding cluster of startups, future is not something to It seems the five requisite strategies for addressing the business accelerators and established businesses to cross- take lightly. coming dearth of talent, on a regional basis, are to: pollinate and support each other. As the district develops, n Improve social inclusion. so do the talents and capacity of local entrepreneurs—and n Support and acknowledge innovative talent. their employees. Naturally, a local ecosystem will spring up n Connect talent to the community. to support the district, bringing with it an abundance of new n Connect talent and employers. jobs and new educational opportunities. n Close near-term talent gaps. Innovation districts provide a clear path forward for lo- As we move to a knowledge economy, the demand cal decision-makers, public officials, heads of large and small grows for open economic and social ecosystems, more companies, universities, community colleges, neighbor- cross-cultural and cross-industry collaboration and more hood community leaders and business organizations to step urban-oriented infrastructure development in areas such as toward a stronger, more sustainable, inclusive community. mass transit and work-live communities. When the innovators succeed, we all succeed in today’s Many of these trends meet in a relatively new develop- economy. Who’s in? ment space, the “innovation district.” I am, whether it’s with the collaborators at the Days Inn The Brookings Institution identifies “innovation site in Midway or in north Minneapolis, where we’re set to districts” as a global megatrend with staying power. The anchor our corporate headquarters in what could be the early trendsetters include cities in Europe (Barcelona, Berlin most innovation-ready neighborhood in the Twin Cities. and Stockholm), Asia (Seoul) and North America (Atlanta, Let’s do it together, to scale. In the meantime take care of Baltimore and Detroit). Importantly, these districts are often yourself and each other. tcbmag located in emerging urban neighborhoods in need of both new ideas and new investment. In fact, Brookings reports Ravi Norman ([email protected]) is the that 45 percent of innovation districts (or urban research CEO of Thor Cos., a holding company for development, design, parks, as they are sometimes called) are located in or near construction and consulting businesses. He holds degrees disadvantaged neighborhoods. in economics, business management and finance from the Note the word “emerging.” The ground must be pre- University of Minnesota.

62 TWIN CITIES BUSINESS tcbmag.com APRIL 2018 Join us 2018 HENDRICKSON FORUM Innovation Culture Dare to risk more, fail faster, and seize opportunities April 24, 2018

KEYNOTE SPEAKER Jackie Freiberg International best-selling author and global consultant

As a business owner, renowned leadership speaker, and best-selling author, Jackie Freiberg will share unconventional, business-best practices of globally admired leaders. Her presentation will guide companies to build a culture that results in innovation, and she will share valuable advice for anyone trying to gain momentum in today’s competitive business climate.

Tickets: smumn.edu/hendricksonforum or at 612-238-4507 Mayo Clinic, Our Health Care Super Bowl

To: Dr. John Noseworthy President and CEO Mayo Clinic 200 First St. SW Rochester, MN 55905

OPEN LETTER Dear Dr. Noseworthy: by Vance K. Opperman The Mayo Clinic was one of a number of corporate will be due the state from the locals who have profited. Rob- sponsors of Super Bowl LII. In spite of severe weather ert Raiola, director of the sports and entertainment group and temperatures below zero, the Super Bowl set records at accounting firm PKF O’Connor Davies, estimated that for average ticket cost and heartfelt accolades. Commen- Patriot quarterback Tom Brady, for example, could end up tators on radio and television, streaming video and live owing Minnesota roughly $43,000. And he lost. blogs, people who write letters to the editor of our local Mayo Clinic came to the Minnesota Legislature in 2013 newspapers and even golf club members in Naples, Fla., and laid out a plan to make Rochester a world-class medical lauded the success: Minnesota and its cadre of willing and destination—what became known as the Destination Medical effective volunteers can do Super Bowl! You were probably Center (DMC). A total of $585 million in state, county and city at the game and witnessed this for yourself. taxes was allocated for the DMC. The overall plan is a unique But hosting the Super Bowl is a once-every-25-years 20-year economic development initiative, which leverages the event. Mayo Clinic, on the other hand, has celebrated more public investment with $5 billion of privately raised funds. Patriots quarterback Tom than 150 years since the original Mayo doctor, Dr. William Public investment in DMC is approximately equal to the Brady, for example, could Worrall Mayo, came to Rochester and opened a medical public investment in U.S. Bank Stadium, the new home of practice. And from that beginning in 1864, the group medi- the Minnesota Vikings and host facility of Super Bowl LII. end up owing Minnesota cal practice of the Mayo doctors has grown. There are those who would argue that public investment in roughly $43,000 in taxes. Growth indeed! The Mayo Clinic is one of the largest sports stadia is always misplaced. By the same token, there And he lost. not-for-profit academic health systems in the United States, are those who would argue that consolidation of medical with revenue in excess of $11 billion per year and over practice in this five-state area should not be financed with 63,000 employees. Mayo Clinic operates in five states, with public monies. But that debate is now over, and in any event major campuses in Rochester, Minn., Jacksonville, Fla., and misses the point. Smart, focused public investment can Scottsdale, Ariz. On an annual basis, Mayo Clinic cares for enhance the quality of life and the economy of the state. approximately 1.3 million patients. They come from all 50 There are those who argue that football will cease to be states and approximately 140 countries. Mayo is ranked No. a major entertainment, or at least lucrative entertainment, 1 in the nation by U.S. News & World Report. It is the largest within the next 20 years due to the impact of brain injuries employer in the state of Minnesota. on players. Nobody can predict which entertainment venues The contributions Mayo Clinic has made to Minnesota, will be wildly popular decades from now. and to medicine generally, are too numerous to list in detail, But one can predict that the need for high-quality but the clinic currently employs more than 3,000 full-time medical care will continue to grow, not just in this country, research personnel and spends more than $660 million a year but internationally. Minnesota is rightfully regarded as one on research. (A list of the 150 most important contributions of the centers for quality medical care, and the success of to medicine by Mayo Clinic can be found at http://history. the DMC and Mayo Clinic will enhance that reputation. mayoclinic.org/impact/contributions-to-medicine.php). Making smart public investments in medical care is one Eradication of goiter (see enlarged thyroid; our region used way to guarantee continued growth in our robust economy. to be known as part of the goiter belt) was advanced when Besides, Mayo Clinic’s research into sports injuries, and Mayo Clinic isolated thyroxin, the principle hormone of the sports-related brain injuries in particular, may result in bet- thyroid gland, which led to simple drug therapy. In 1950, two ter treatment and safer play for professional football players. Mayo Clinic team members received the Nobel Prize in medi- Mayo Clinic is our Super Bowl of health care. Its growth cine for their discovery of cortisone. There are many readers and success show that in Minnesota we can do health care, of this column who currently benefit from that discovery and just as the Super Bowl showed that in Minnesota, we can do its medical application. Hip replacement and, for that matter, Super Bowl. tcbmag joint replacement generally, followed the first FDA-approved total hip replacement in the United States, performed by Mayo Sincerely, Clinic. Mayo established the link between insulin and diabetes, thus becoming one of the very first clinics in the world to treat Vance K. Opperman diabetes with insulin. Mayo Clinic has led research in the devel- A thankful patient opment of antihistamines, drugs to treat high blood pressure, and a wide variety of heart operations. There are various estimates of what economic return Vance K. Opperman ([email protected]) that Minnesota, and more particularly Minneapolis, got out is owner and CEO of MSP Communications, which publishes of hosting the Super Bowl; various media accounts have Twin Cities Business. ranged from $300 million to $500 million. A hefty tax bill

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