Greater Houston Partnership, Bob Harvey

Q: What has your journey to become the President of the largest chamber of commerce and Greater Houston Partnership been like?

A: I’m a native Houstonian. Growing up in Spring Branch, I went to Spring Woods High School. Later, I went to Texas A&M and studied Mechanical Engineering. While I was at A&M, I was very active on Campus, serving as the Core Commander and the Student Body President. Upon graduation, I went to work for an energy company, Amoco Production, now a part of British Petroleum.  Then I went to Harvard Business School. After finishing Harvard, I went to work for McKinsey & Company where I spent 17 years, all in the Houston office.  However, our clients were global, therefore a lot of travel was involved. In 1999, I went to Reliant Energy as the Vice Chairman of Reliant. Reliant back then included what is now Center Point Energy. By 2005, I was 49 and semi-retired, which allowed me to become more active in the community. I was Chairman of the United Way and Chairman of Montessori Schools. Also, I became active at the Houston Zoo. In 2012, I received the call from the Greater Houston Partnership to meet with the search committee about this opportunity. I have been here ever since.

Q: It has been reported by the US Department of Commerce in 2016 that Houston is the second largest exporter of chemicals, petroleum, and coal products in the U. S. What are your thoughts on industries such as Life Science and Technology? What can businesses and companies do to push growth in these sectors?

A: Let me step back a little bit to that first point you made. We are the second largest merchandise exporter, which is the term, meaning there are services and merchandise. We are the second largest merchandise exporter after, New York. New York is literally three times the size of Houston in terms of population and GDP, but we go back and forth between New York. Some years we are number one; some years they are number one. We will be number one again.

We have a very large export community in Houston, which we should be proud of as Houstonians. We are very globally connected. The energy and petroleum products, refined products, and chemical byproducts are all a big part of that.

We now identify Life Sscience as our second major industry. When we think about diversifying the Houston economy, we point specifically to Life Science as the opportunity we ought to explain.

The key with Life Science is that we’re strong in clinical, meaning serving patients in beds. We have several medical schools making us strong in medical education. We lead in clinical trials; Oncology for example. Where we have been weak is in the commercialization of that activity, which means, the ability to take a new diagnostic approach, new therapy, or a new medical device, to market.

What happens is we invent here in Houston.  Then companies, often from the East coast and the West coast, such as Boston, San Francisco or San Diego, come to Houston. They license that invention or that technology. Then they build the businesses in another location. The change we’re seeking is to make Houston more of a commercialization center for the intellectual property, if you will.

The Texas Medical Center is probably the Houston asset best known around the world. When we fly somewhere, the first conversation today is likely concerning the Texas Medical Center; and they refer to it as an individual institution. MD Anderson has a very good reputation, and Texas Children’s Hospital is widely recognized. Increasingly, they are talking about the medical center and its entirety of 50-plus institutions. It is remarkable how the reputation has expanded.

I think you mentioned Innovation and Technology; so, we have Energy in the broadest sense of the word, including alternative energies. Undeniably, that is our number one industry. Life Science is our strong number two. The area where we need to grow even more, and where we’re probably the most behind is an aspect of innovation. It is in Startups.  Let me reiterate, “Houston is a very innovative city.” We are known for innovation, especially for innovation in what I will call the institutional settings and corporate settings. The energy industry is extraordinarily innovative. Think about the shale drilling that came out of Houston-based technology, the Medical Center and all the work we have done from Oncology to Cardiovascular and NASA, also an institutional innovation. We are not high on disruptive startups; startups that can move ahead and change the world. They can add a huge market value in a relatively short period of time. However, we have not been taking an active role in such ventures. Now, we are working very hard in to change. The question is how do we build a more robust startup ecosystem?

Q: With Artificial Intelligence and Robotics?

A: Appropriately, you are jumping to the piece that is most important, which is the digital piece. We are becoming more and more aware that a lot of the startup activity today is in digital technology. Even what is happening in the medical center has a lot of digital elements. While Houston has always been strong in Stem Cell Protocol, classic Stem Cell Protocol. We are number one in the nation in Stem Cell Protocol, in terms of Stem Cell workers, we are not as strong in digital technology. We need more software engineers, mathematicians, statisticians, and experts in data analytics.

You realize that today people are talking about Manufacturing 4.0. All basic industries are evolving to become more digital dependent. That is the evolution. Houston not only needs to catch up; we need to lead. We won’t be strong in manufacturing if we’re not strong in digital.

Q: You recently spearheaded a trade mission to China with Mayor Turner last December 2017. What was your experience and take away?

A: Well the best way for me to describe this trip is relative to the prior trip in 2013. This was a larger trade delegation. This was arguably the largest trade delegation we have ever conducted. It is at least the largest we can identify in our records. There is a lot of interest in Houston with China, not surprisingly. In 2013, we had just added the Air China direct flight.

Going to Beijing and Shanghai in 2013 felt like we were introducing Houston to a lot of people. That was the sense we had, even though obviously, there have been strong connections between Houston and China for years. Trade between Houston and China has grown, I believe, by 5.7% per year compounded for ten years. That makes a difference over time.

Arriving this time, we didn’t have to introduce ourselves. People we were meeting with, whether they were government officials or private sector officials, they already knew Houston. We went right into discussing business opportunities and opportunities to work better.

We traveled to Shenzhen, Shanghai, and Beijing. What was a common thread in the meetings was the emphasis on Life Science. As I mentioned before, Houston and the Texas Medical Center resonated with the Chinese.

The challenge for China is to bring a high-quality healthcare system to their people. It is a real challenge. So, the opportunity to become partners with the Texas Medical Center was part of almost every conversation and of utmost interest. They knew us, and they were interested in talking Life Science in all three cities.

The second important topic I noticed was the digital element. Every conversation in China had a strong digital component. They recognize how rapidly the world is digitizing, so they talked about one of their container terminals that was completely digitized with no workers –everything was automated. So, I came back to Houston realizing that for Houston to compete in this world, we are going to have to be more digital, and we must progress at a more rapid pace.

Q: Anything else you would like to add about the trade mission?

A: I’ll mention one. We had a meeting with the National Development and Reform Commission (NDRC), the top planning body of China. When meeting with the NDRC, they are talking about the future of China. The conversation was all about Life Science and the Medical Center. There is a new airport proposed for Beijing. They want to locate a Medical City next to the new airport, and they would like the Texas Medical Center to be the partner.

There is a lot of detail to be worked out. There were several conversations prior to, during and since the trip, about how to build such a partnership. It is complex. The fact that the people in China are looking to partner with our Medical Center is a major investment and commitment. Many conversations have taken place between the key parties. It has not yet progressed beyond discussions.

When you are operating at the level of the NDRC, you know you are dealing with the highest levels of the China government. Often in dealing with China, we are trying to figure out whether the party we are talking with has the full support of the government. Someone made the comment years ago when the Air China flight Houston to Beijing was created that this was of major significance. Beyond just adding another international flight, Air China goes where the government of China wants them to go. It was strategic. The dialogue between Houston and China has since increased many folds.

Let me mention one more thing. One of the last visits in Beijing, the third city of the trip, was with the National Energy Administration (NEA). It is their senior energy government body. They spoke about the evolution of China and needing to use more clean fuel or natural gas.

China sees Houston and Texas as a major supplier of LNG (Liquified Natural Gas). This was not a part of the discussion in 2013. We were having discussions about LNG with other Asian countries; but not, with China.  Now, it is very much a part of the China discussion, because they made a commitment to clean up their air. Clean air means converting coal to natural gas.

They realized this would be largely an import phenomenon. China also wanted to talk to Houston companies about helping them develop the shale drilling, that they have in China.  This would be a long-term opportunity, because it would involve building a lot of infrastructure.

Hence, this was a two-part conversation– LNG export from Texas, and the capability of U. S. companies, including Texas, to help China develop their shale plane.

This is a major change; they have frankly not welcomed U.S. energy companies onto the mainland of China. For the most part, they reserved that market for the Chinese oil companies. That has really developed a lot of their skills. Then those companies went global and international, and several of them are in Houston. This idea that they’re welcoming Houston companies back onto the mainland of China is a major shift. The opportunity is still early but it’s like the conversations we had in Mexico when they first started talking about energy reform. I think Houston companies are now looking at China and trying to decide whether the opportunities are real.  How difficult or complex will they be? How many years will it take to generate revenue and build a presence. This is a major shift from where we were three years ago.

Q: Some of the most pressing issues in Houston, according to regional leaders, McKinsey & Company and GHP are to develop, attract and retain talent, to make Houston an even better place to live. What is being done, and how can Houstonians help?

A: You just described the priorities we put forth back in 2013. We are reviewing them to determine whether they should continue to be the priorities. Nevertheless, they are still our current priorities.

Houston relies heavily on bringing talent to Houston. We do not produce the number of baccalaureate degrees in this Metropolis that we should. Look at the top 10 cities in the U.S. We produce fewer baccalaureate degrees per capita than any of the other top ten cities. We just do not have as well-developed or the same scale of higher education in Houston. Now that might change over time. The University of Houston is growing. Other institutions are growing; but still, compared to a major metropolitan area of 6.8 million people; we are relatively undeveloped. We must rely on importing talent, which means we must maintain an image of Houston that is attractive to; let’s say millennials, to current college students and recent graduates to bring them to Houston. Currently most of the young people come from either, Texas, or from SEC schools, big 12, Midwest, Southeast. But over time, we need to improve our reputation and our brand in the northeast and on the west coast. That moves us to the image issue. Houston is still perceived on the two coasts as more conservative.

I think there is a view that all we do is energy, so they do not recognize that we have developed diverse fields of endeavor. Therefore, we must continually challenge that image. We had an incredible run starting with the Final Four back in 2016, and then Copa América, the Super Bowl, and the World Series. We have gotten a lot of great national press that has highlighted Houston as a much more diverse and progressive city. You know then that people tend to think, we need to create an image and a brand specifically of Houston, which is distinct from the image of the state of Texas even though we are proud to be Texan, and we are known around the world as Texas.

It is important for Houston to be seen for what it is as a great global city with diversity, which is in some ways distinct from the brand that Texas tends to project. To talk about attracting talent and image you must build it around what we are as Houston.

Q: We must create an identity independent of Texas. What can Houstonians do to help the initiative?

A: At the time of the Super Bowl, we had some simple messages that we wanted everyone to use. One was to emphasize the diversity of Houston. We live it, so we kind of take it for granted, but it is important to remind Houstonians that we truly are the most diverse, major city in the U.S. One out of four Houstonians is born outside of the United States. We are not just ethnically diverse, but we are extraordinarily global in the tentacles of this city. We reach all corners of the world.

Secondly, we want to say Houston is fun and affordable. I think the quality of life aspects we now enjoy today, we didn’t enjoy 20 years ago. We have a reputation for great restaurants, nightlife, professional sports, and the arts; all those elements are accessible here in Houston. They are affordable. There are other cities around the U.S. that probably have a similar quality of life opportunity, but the cost of living is so high that you do not have the disposable income at the end of the day to take advantage of it.

Third, Houston is a city of opportunity, a place where you can begin a career or kind of propel your career. One thing about Houston, at slow times we grow somewhat and then at great times we grow rapidly.

This is always a city where you can come and plant your flag, and people are going to be supportive. They want you to succeed. You can be your own creator. That idea of an opportunity city is one that we think we need to extend to the whole community here in Houston that what we want to be known for is a city where the ladder of success isn’t missing the first three rows. That is what is happening in many other cities. It is great to live in San Francisco if you have an advanced degree. If you do not have an advanced degree in San Francisco, you are probably thinking about leaving because the cost of living is so high and there are not opportunities for those people with lesser academic credentials.

We want to be a city in Houston where there is an opportunity for everyone to progress. Our economy provides those pathways. That is why we spend so much time on workforce development. It is all about how we create opportunities even for people who do not have a college degree to have success.

Q: How we can support the Greater Houston Partnership?

A: The Greater Houston Partnership is a member-based organization and people should know that. Any business is eligible to be a member. It is a dues-based organization, but the dues level start at a modest level. Even at the modest dues level members have access to all our programs and all the information we distributed to the community. You get member price at all our events. We have what are called Council meetings, which are topical meetings, where we cover all these major issues, and they are open to all members. All this means that any employee of a member company can come to any of those programs or councils. So, there are lots of ways to engage with the partnership. As you grow as a business, and you have more interest and time to devote to the community, the partnership is a very effective vehicle for individuals who care about Houston and want to effect change in Houston. Also, it is a great way to engage with other like-minded individuals to make a difference. So, you know people should think about their area of interest they have in the community that could range from education to the environment and everything in between.  The partnership is a tremendous vehicle for exercising that civic interest in making a difference. So, we would like to invite any of those people to join as partner

We have one publication called The Economy at a Glance which is published by our research department and managed by Patrick Jankowski. He summarizes the Houston economy every month in a way that if you are a business person in Houston thinking about whether to grow, whether this a good time to grow, which direction is the economy headed, and what parts of the economy or industries are carrying the Houston economy, you can find the information in there.

Well we will echo that in our publication. Thank you for your time.

 

Interview By: Vivienne Kwon