The 2018 Ingram’s 250 General Assembly

Kansas City: Opportunities Abound for Real Change

Rarely will you find as much executive firepower in one room as the gathering at the law offices of Husch Blackwell early Sept. 7. Nearly three dozen members of the 2018 class of Ingram’s 250—the most influential business leaders in the region—met to discuss the various opportunities that sit at the feet of corporate Kansas City. From Big Data and data science to animal health, from logistics to engineering and construction, they assessed changes in the broader economy, and the ways that change must be addressed for long-term business success. Under the guidance of co-chairs Jeff Simon of the host law firm and Bridgette Williams of the Heavy Constructors Association of Greater Kansas City, they drilled deep into the business community’s stake in resolving lingering challenges with violent crime and our national image. It was not all high-minded talk; these men and women of action had some specific suggestions for moving the needle on public-safety issues. While it remains to be seen whether the discussion will generate tangible efforts to erase that stain on the city’s reputation, the meeting concluded with a common thought: Keep this conversation going.

Opportunities Abounding

In the tradition of executives who believe you can’t set an agenda for progress without understanding your current core strengths, Rich Smith of Henderson Engineers weighed in right away. “One of the things that Kansas City has, in addition to jazz, barbecue and fountains, is really good architecture and engineering and construction. We’re one of the top five concentrations in the United States,” he said.

But how, asked P1 Group’s Smitty Belcher, are we marketing those strengths to the rest of the world? Smith said he thought KC Rising, among other civic groups, was effectively pushing that message.

Mauli Agrawal, who arrived recently to lead UMKC as chancellor, addressed opportunities here with a bit of an outsider’s perspective. Construction, yes, and animal health were sound pillars, even within a diversified economy, but the true opportunities for regional growth are waiting to be seized with mastery of Big Data and data science.

“There’s a revolution taking throughout the country,” Agrawal said. “It’s across all industry sectors—engineering to financial to better outcomes with animal health.… I think we can really capitalize on that because there’s no city in the nation that owns this yet.” Tyler Nottberg of U.S. Engineering said movement into new business frontiers would be a strong addition to the regional business ecosystem. “These kinds of trends are what the community needs to ensure that over the long term, Kansas City’s economy doesn’t become so concentrated,” he said. He invoked the oft-cited observation from Tom Hoenig, former CEO of the Federal Reserve Bank of Kansas City, that lack of a single major industry here—unlike Detroit and vehicle manufacturing or the Bay area and tech—proved a stabilizing factor within the region’s economic climate.

For Mark Jorgenson of U.S. Bank, “there’s a sense of urgency to 3½ million Baby Boomers retiring now every year.” That, he said, is stressing employers in the search for talent. While hiring managersmay not lack for bodies as the even-larger Millennial generation continues to come of work age, the experience factor looms large as older workers take a career’s worth of knowledge with them into retirement.

“Experience is walking out the door,” he said. And an even bigger concern lies with the next generation up, Generation Z. Demographers say the ranks of that now under-21 crowd exceed those of both Millennials and Baby Boomers. “We need to understand what the differences are between them; two things that they value are diversity in the workforce and secondly, technology. So we need to up our game.”

The gift—if that’s the right word—of technological advances will carry with it life-or-death consequences for companies operating today, said Matt Condon of Bardavon Health Innovations, which uses deep data dives to help companies formulate work-force wellness planning. “If you’re planning to do business the same way 10 years from now as you’re doing it today, you will be surpassed.” The consequence of so much change across industries, he said, would be true disruption, and it won’t end anytime soon. As a result, business will be increasingly dependent on universities to shape the next cohort of workers, and on business leaders today to be more accepting of the coming—and inevitable—change.

One development that augurs well for the broader economy and universities, said Ralph Richardson of the Kansas State University-Olathe campus, “will be increasing opportunities for public-private partnerships, which are really, really rich in Kansas City.” Citing North Carolina’s Research Park Triangle as an example, he said Kansas City is blessed to be bracketed by major research and land-grant universities that can drive research, commercialization and business startups.

That, however, implies public-sector investment, which Ramin Cherafat of McCownGordon Construction said had been a disappointment in Missouri and Kansas in recent years. Assembly chairman Jeff Simon thought a stronger reaction was warranted. “It’s embarrassing,” he said, “where Missouri and Kansas are in education compared to poor states.”

Lenexa Mayor Mike Boehm fears that if conservatives sweep back into power in the upcoming elections in Kansas, funding for both education and infrastrucre could suffer and “we’ll be underwater again soon.”

A big hole in current work-force development, JE Dunn Chairman Steve Dunn said, was the messaging to young workers about the potential to earn a good living in construction and associated trades. Part of that message was implied, when school districts began jettisoning vo-tech programs en masse with budget restrictions over the past generation. Part of it was explicit, with the nature of current university programming. “There is not one degree program in construction management in the state of Missouri,” he said. “I don’t understand that.” That, he said, is why it’s important for business leaders and construction companies to get more involved in the education system, K-12 included.

Agrawal sees an imperative for UMKC to significantly increase the footprint of its School of Computing and Engineering. He had a conversation not long ago with the school’s dean, Kevin Truman, asking how a metro community of 2.2 million could have such a small university-level engineering program. “You should have seen it when I got here; it’s triple what it was,” he said Truman told him. “I said we need to triple it again,” the chancellor said, because “disruption is also coming to education. We have to get ready for it, and education in the future will be bite-sized.”

The four-year degree will endure, he said, but more rapid-fire instruction in the form of certificate programs will be required to speed the entry of qualified workers into the job market. “Community colleges and four-year universities need to offer more certificates that get people the skill sets that industries need,” he said, and the four-year schools must find ways to string those certifications together to yield the promise of a degree. That means changing an educational process that’s been in place for hundreds of years.

Polly Thomas of CBIZ pointed out that school districts are working with universities on advanced classes for college credit while students are still in high school, reducing college cost and “creating opportunities to start earlier with these kids.”

But fundamental change is also taking place in the blue-collar world. At Midwest Ford Truck Center, said president Trey Meyer, technicians working on vehicle engines today “have taken way more classes than I had going to college.” The ability to operate computer diagnostic tools—in some cases, measuring hundreds of vehicle operating metrics per second—has changed the very nature of what it means to be a mechanic, he said.

If Kansas City is looking to capitalize more on assets in place, there’s no quicker solution than focusing more on food and agribusiness, said Bob Thompson of Bryan Cave Leighton Paisner, who knows something about that sector, having been raised on a farm. “Sometimes, we fail to exploit one of our natural competitive advantages of sitting right here between two land-grant universities (Mizzou and K-State),” he said.

Even in the ag sector, Big Data will have huge implications, said Ralph Richardson. Precision agriculture is reaching a point where new tools and data analytics will allow farmers to apply herbicide to an individual weed in the field, rather than carpet-bombing the land with chemicals. “The Big Data aspect of things is just totally transforming,” he said.

Mark Jorgenson turned that evolution toward its dark side; Data security. “That’s another area where we cannot find the people,” he said. That’s becoming a critical issue as banks in particular pivot to fend off the challenges of criminal enterprises that inflict a $6 trillion global toll on business through fraud.

“That,” said Jeff Simon, “is the No. 1 issue in corporate boardrooms.”

Whatever the challenges we face, Kansas City business can take some comfort in knowing that they have something to sell to prospective hires. “This city is an easy sell with its arts, its housing costs, its world-class health care,” he said.

“My biggest concern,” said BKD’s Abe Cole, “is how disruptive technology is going to be; we really have to be prepared to retool our existing work force. There are going to be millions and millions of jobs taken away.” That’s true even in his accounting profession, where there are partners at the top of the organizational pyramid and staff below that will be winnowed by technology. “There’s got to be some additional training for those people midway through their careers,” he said.

Pete Smith of McDowell, Rice, Smith & Buchanan, cited his experience years ago in Wyandotte County as a possible path for the region to evaluate where it wants to go. Once an economic backwater—and still trailing other area counties in that regard—he was involved with a Chamber of Commerce effort to measure the costs of manufacturing a product there, compiling relevant data from other cities, and producing a tool that helped decision-makers see the value of locating in Kansas City, Kan. That, he said, produced “a very good result, attracting industry that matched our work force.”

Assembly co-chair Bridgette Williams said the region was well-positioned for growth thanks to a few major initiatives moving toward or under construction, like the Downtown convention hotel, a rebuilding of Kansas City International Airport and expansion of the streetcar line. But as director of the Heavy Constructors Association of Greater Kansas City, she sees some very dark clouds are gathering.

Fresh off a trip from central Kansas, Williams said she had just heard that within five years, half the bridges in that state would be unsafe for vehicle traffic. And Missouri’s roads and bridges aren’t faring much better. “Would the November ballot measure to increase Missouri’s gasoline tax by 10 cents get past voters”, she asked.

Bob Thompson isn’t holding his breath. Without more engagement from proponents and the business community, he said, “I think it will be a heavier lift than the government believes,” because voters “don’t understand or don’t believe it is needed, and I think it is a default to ‘no’” at the ballot box, he said.

Crosby Kemper III said one challenge in passing that tax—or any in the state—is that Kansas City and St. Louis are both high-tax metro areas. The problem with getting voters to approve such increases
has been the lack of demonstrated productivity that would come from the money. “We’re focused on the wrong things,” he said.

In that sense, it’s a little different as a policy matter than when he chaired a higher education commission for the state, a group that proposed moving Mizzou’s school of engineering to UMKC to be closer to the critical mass of engineering firms here. That went nowhere with policymakers.

Honest Talk on Crime

Rarely do these forums laser in on a single topic that can command half the allotted time, but Jeff Simons seized on one when he opened the second session with some chilling statistics on violent crime.

Among cities with at least 200,000 residents, he said citing police statistics, Kansas City has more violent crime per 100,000 residents than all but four major metro areas—Detroit, St. Louis, Memphis and Baltimore. And more than double the big-city average for homicides. “This, he declared, “can’t be ignored. This has been intractable. This is an issue and Kansas City for far too long has failed to address it. It is a business issue, it is an attraction issue, it is a contentious issue because it affects the quality of life of everyone we employ and the communities that they live in.”

He has argued at prior assemblies that the business community still bears responsibility for racial divisions in town, because executives from major companies long ago embraced policies that promoted geographic division along racial lines—and profited from it—with housing covenants, lending restrictions and other tools.

“Let’s just call it what it is,” he said. “I would suggest that it can no longer be ignored and you can ignore looking, we can avoid some of the more uncomfortable discussions with race. But let’s look at it just as a business proposition. … We have an enormous pool of unused resources in the same area where we have these crime issues.”

The real issue, said Crosby Kemper III, isn’t the race of the perpetrators: “African-Americans in this community are victims of crime by a far higher percentage than any other group.” But despite what some mayoral candidates have suggested, Kemper said the problem can’t be blamed on poverty—other large cities with considerably higher rates of poverty have considerably lower levels of violent crime.

A more likely suspect, he said, was the lack of community policing here. “When was the last time you saw a cop walking the street? You see them, they’re in their cars, brand new cars. That’s where we spend our money, on cars.” And elsewhere, he said, “you have a higher ratio of people sitting at desks compared to people on the street.”

He lambasted the process that produced a $100-million evidence lab in the inner city—wiping out four blocks in the process—only to see clearance rates fall by a third. Even efforts to address crime at the neighborhood level too often entail meetings of agencies, rather than residents. “The civic community hasn’t been interested in this; I agree—everything
you said is exactly right,” he told Simon. “This is a huge issue.”

Bridgette Williams echoed concerns about involving more residents to find solutions. “We can’t act like
we don’t know what the reasons are, but we truly won’t know until we start talking to people in the community that are experiencing those problems,” she said. And it’s no longer an east-of-Troost issue, she said. “It’s about Johnson County. It’s about Kansas City, Kansas.
We have to be willing to have hard conversations and create some sort of plan that the community feels like is a real plan.”

A major driver of crime, she said, is an increasing sense of hopelessness among those who live in the poorest areas of the city. “We’ve got to create some hope, but how do we do that when you read in the newspaper that people are openly being discriminated against because of their name.”

“Can the police do better?” Simon asked. “Absolutely. Can prosecutors do better? Yes. You have the jail—that’s a real problem in the criminal-justice system.” But the major concern, he said, revealed itself in a conversation he had with a judge who commented on the difference between people being sentenced for crimes today vs. those of a generation ago. “The difference is hopelessness. It used  to be they knew there was some hope that maybe there could be something else for them other than crime. What I see now is hopelessness: What does it matter if I go to prison? There’s nothing else for me?”

Charles Renner of Husch Blackwell added another thread to the weave of complex challenges: “The hurdles people have to go through to get to work reliably,” he said, in a city without an extensive public transportation system.
But trying to solve the crime problem in the Kansas City area without physically being in that community, said Ramin Cherafat, would make as little sense as asking people east of Troost to come up with solutions for teen suicide in Johnson County.

“They need mentors. They need help,” said Matt Condon. “They need people who are going to come alongside of them and not just throw money at the problem.” As part of a chamber initiative to address crime issues, he was counseled that the city is not going to rush its way out of these problems. One strategy for attacking the problem in Boston, he said, entailed efforts to recruit gang leaders to meaningful jobs—once the leaders were out of the equation, others were more likely to follow suit.

It’s important, said Debbie Wilkerson of the Greater Kansas City Community Foundation, that business executives find ways to engage with difference-makers in non-profit ventures aimed at those parts of town. “In that space, you can maybe build a relationship and the networking that naturally happens,” she said. But it’s also important for businesses to look inward and ask whether past practices—questions about criminal history on application forms, for example—were perpetuating divisions.

Solutions, though, cannot be solely aimed at young offenders, said Bridgette Williams, “It is not just young people. We have an entire adult population involved because moms are having kids younger and dads who can’t pay their child support are thrown in jail, so then you have grandmothers who are raising the kids and it just spirals down.”

Heather Humphrey of Evergy/KCP&L, though, noted that many men who find themselves behind bars for non-payment are mysteriously able to access those funds in such situation.

Pete Smith called for policies that would encourage more development in downtrodden areas, and John Meara said changes in tax laws that eliminate capital gains in certain areas can be levered to do just that. Crosby Kemper added that policies aimed at subsidizing development are badly flawed when they treat incentives for the Plaza and Prospect Boulevard as equal propositions. “If we reorganized the city’s economic development policy to have subsidized development only east of Troost, I guarantee you there would be development east of Troost.”

“It’s not the answer to everything,” said Matt Condon the outgoing chairman of the Greater Kansas City Chamber of Commerce, “but one of the things I would encourage you to do is that when Joe Reardon calls you from the chamber and says ‘Hey, can I come and talk with your company or group of individuals about what this really means’ say, ‘Yes, I’d be happy to take an hour hour-and-a-half to expose people to this.’”