News Column

Chicago Locks Arms with Microsoft, Builds Tech Relationships

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Mayor Rahm Emanuel welcomed Microsoft CEO Steve Ballmer like a friend at an early morning technology event and told the crowd of entrepreneurs and software developers how proud he is of the city's partnership with the corporate titan.

"I want everyone to know how important Microsoft has been to the city of Chicago. The city of Chicago has put its money where its mouth is, in the sense that Microsoft is now running our entire cloud system," Emanuel said at last week's Merchandise Mart event.

The company is also giving back to the city, the mayor said: "They run 12 parent-engagement centers at schools so parents actually have a full technology education."

The mayor's concise explanation of the mutually beneficial arrangement between the city and the software giant is the latest example of Emanuel locking arms with the corporate world in relationships where financial, political and civic interests are intertwined.

Whether it's putting more grocery stores in poor neighborhoods, paying to host world leaders at the NATO conference or raising $50 million to help tackle the city's stubborn homicide rate, Emanuel regularly places business leaders at the center of his plans to fix Chicago.

In return, CEOs and entrepreneurs are treated to a mayor seeking to elevate Chicago's business-friendly image to new heights, sometimes by sheer force of personality.

Emanuel has turned what might otherwise be routine business expansions into public events worthy of celebration. He shows up at company headquarters, congratulates owners on agreements with union workers and puts their company's logo next to the city's official seal atop announcements.

The mayor, who shares many of the attributes of hard-driving CEOs and made millions in a brief stint as an investment banker, walks seamlessly between the worlds of government and business. The interplay of commercial and civic aspirations, so clearly on display at the Microsoft event, are hallmarks of an administration that uses Emanuel's national clout to position Chicago as a global city.

Many of the companies Emanuel touts are finding Chicago to be an inviting place to do business.

Early last year, Emanuel announced that Microsoft was one of five tech companies providing curriculum help and mentoring at science-oriented public high schools. Later in the year he announced that Microsoft would help pay for equipment to help parents improve their computer skills.

In January the city announced a $3.7 million, four-year deal with Microsoft to move 30,000 employees' email and desktop applications to Microsoft cloud computing, a step city officials say will trim costs by $400,000 a year. Ballmer cited the deal during his remarks, while also talking up Microsoft products.

"It couldn't be a better time, I think, to start companies, and it certainly doesn't seem like you could have a better place to get started than 1871," Ballmer said, referring to the tech startup center at the Merchandise Mart.

Homegrown Fortune 500 companies have developed similar relationships with Emanuel.

Deerfield-based Walgreen Co. has repeatedly won praise from the mayor for stepping up to solve city problems -- from agreeing to put more stores in so-called food deserts to offering reward cards worth $25 to parents who pick up their children's school report cards. At the end of 2012, Walgreen received an exclusive no-bid contract to provide wellness screenings for thousands of city of Chicago workers.

Building a good relationship with the business community has long been a key factor for Chicago's Democratic mayors in maintaining a successful, re-electable identity. But while former Mayor Richard M. Daley approached business leaders from the perspective of an elected official asking a company executive to do his or her civic duty, Emanuel is louder, faster and armed with an undeniable urgency.

Daley would rarely call executives he didn't have some rapport with, leaving that work to aides. Emanuel isn't afraid to pick up his cellphone and dial up a CEO he's never met.

The mayor uses his reputation as a hard charger to his advantage, relentlessly working his phone and challenging executives to "step up" to get them more involved, several advisers said. When talking to business leaders, especially men, he'll often confront them to do more for the city.

"It's like, 'So, you think you are such a big man, why don't you help me fix the city by working with me on this issue or that issue?'" said one Democratic strategist. "He works on their machismo."

At least some of those on the receiving end savor the pugilistic approach.

"Yes, I've heard him use a little bit of colorful language, but I do too," said Jim Reynolds, CEO of Loop Capital Partners and co-leader of the $50 million anti-violence push. "When we go at it, we can have a good time together."

Reynolds, whose investment banking firm has received city business for 15 years, said he typically volunteers his help to the city -- "usually I don't wait until I'm asked."

Emanuel's experience at crafting a national message is evident at City Hall, where his public relations team is looking to weave a company's cooperation into the mayor's narrative about how the city is on the track to economic recovery.

He has made more than 70 announcements about companies pledging to bring more than 25,000 jobs to Chicago.

Many companies that have promised to open an office in Chicago or expand their employment rolls have been featured in co-branded news releases featuring praise from Emanuel while the company's logo stands side by side with the official city seal.

Those types of announcements can provide an image boost for both the company and the city, experts said.

"People are coming to the belief that Chicago really is an economically vital city, but what the double endorsement does is increase the credibility of that kind of information," said Northwestern University marketing professor Bobby Calder. "It's not just the mayor saying it -- there's a business providing factual evidence. And also it's not just the company touting itself -- it's officially endorsed by the government."

Emanuel declined to be interviewed but issued a statement saying he is proud and appreciative that businesses "have stepped up on behalf of their city." His office said there is no connection between approaching companies for civic support and the awarding of contracts for city business.

Few companies have more fully embraced the mayor's strategy than Walgreen, the nation's largest pharmacy chain.

Emanuel and Walgreen CEO Greg Wasson didn't know each other well before the mayor took office in 2011 but quickly developed a mutual admiration.

In June 2011, Wasson was at Emanuel's side during his first summit with CEOs to discuss food deserts. Two weeks later the city and Walgreen jointly announced that the company would add 600 jobs and open more than three dozen new stores in areas of the city deemed to be in need of places to buy fresh groceries.

In October, the mayor and Wasson unveiled a pilot program in 70 Chicago public schools to encourage parental involvement by offering parents $25 on new Walgreen Balance Rewards cards if they picked up their children's report cards.

Emanuel said Wasson volunteered after the mayor explained the problem while the two men attended a charity dinner.

"And Greg says, 'We're in, we'll do it,'" Emanuel told reporters.

In December, Emanuel stood in a new Walgreens store before a phalanx of news cameras while urging city residents to get a flu shot. Later that month it was disclosed that Walgreen had received the no-bid contract to do wellness screenings for thousands of city employees.

City officials said that while no bids were sought, they also talked to representatives from the rival CVS pharmacy chain before deciding on Walgreen.

"After a review of both Walgreens and CVS, including the greater access to 24-hour pharmacies that Walgreens offers, the city chose us as a provider for these health care services," Walgreen spokesman Michael Polzin said.

While the value of the city contract will max out at $700,000, the partnerships are likely to boost foot traffic in Walgreens stores. Even more, Emanuel provides the type of celebrity endorsement that businesses value.

"So to have a mayor attached to your brand in that way -- and you haven't paid for it -- gets you a good deal of results," Northwestern's Calder said.

Some of the most successful partnerships are forged through World Business Chicago, the nonprofit organization Emanuel significantly expanded in size and influence. The organization, which meets privately with Emanuel to strategize on economic development, has become a power center for the area's business leaders. Wasson and many other top CEOs are on the board of directors.

World Business Chicago was central to one of Emanuel's first big efforts to get the business community to pony up for the city -- a fundraising call for the 2012 NATO summit.

Much like Daley's call for private aid when he was trying to lure the 2016 Olympics here, Emanuel sold the NATO summit as an effort to put Chicago on the national stage. Major companies donated $33 million for the summit.

The requests didn't stop there.

Some have been traditional capital projects, such as Exelon, CNA and Boeing donating millions of dollars for the Bloomingdale Trail project and other companies pledging support for the $55 million Maggie Daley Park project. Others have been more obscure, such as Wal-Mart paying $25,000 to fund door-to-door visits to make sure children show up for the first day of school.

Business and political insiders say Emanuel does much of the asking himself, reminiscent of his days as a legendary political fundraiser for Daley and national politicians, including President Barack Obama. He personally and relentlessly works his cellphone contact list, one day quietly pressing a CEO for help and the next calling just to schmooze.

His friendship with William Brodsky, chairman and CEO of the Chicago Board Options Exchange, serves as one example of how the mayor's path through the halls of politics and business have led to strong ties. CBOE was a NATO sponsor and Brodsky serves on the World Business Chicago board.

"I've had a long, very positive relationship with the mayor," said Brodsky, who met Emanuel years ago while they were raising campaign money for Daley and continued the relationship while Emanuel was a key White House staffer. In his investment banker period, Emanuel worked with the CBOE, Brodsky recalled.

The mayor helped CBOE and other city exchanges win favorable state tax code adjustments in Springfield in 2011. But Brodsky said there "never ever has been any quid pro quo."

"It's not necessary because we all have the same motivation -- how to make the city more competitive," he said.

Privately, several city business leaders say that while they support Emanuel's leadership, they'd like to see a more cohesive plan for tapping the private sector -- and for measuring results. Some pointed to the mayor's most recent and largest ask -- $50 million over five years to fund as-yet unspecified anti-violence programs.

"There's no plan, there's no measuring outcomes," said a prominent business executive who spoke on condition of anonymity.

With some business leaders still miffed that $10 million in unused NATO donations were allocated to other projects and not returned to contributors, the executive said, "Everyone is looking at each other and saying, 'Here it comes again.'"

Still, the business community is stepping up again, in part because of faith in the initiative's leadership.

Tom Wilson, chairman, president and CEO of Northbrook-based Allstate Corp., is center stage among business leaders on the project along with Loop Capital's Reynolds.

Wilson said he had been working for about 18 months with Emanuel and Cook County President Toni Preckwinkle on a collaborative effort with the business sector to develop a coherent anti-violence strategy.

But the idea that businesses would raise $50 million for a large-scale effort wasn't raised until Feb. 20, about three weeks after the shooting death of 15-year-old Hadiya Pendleton brought Chicago's rising homicide rate into the international spotlight.

Emanuel held a news conference to showcase the effort, including Allstate's pledge of $5 million. So far the business community has pledged $18.5 million, Emanuel spokeswoman Sarah Hamilton said Monday.

Wilson sees his involvement as falling in line with a long tradition of corporate involvement in civic affairs, one that goes back to early 20th-century Chicago.

"Daley leveraged that, and Rahm does as well," he said. "I think it's a smart move by a politician, as opposed to demonizing business. It's smart for his objectives."

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