The Process of Innovation

Today I begin walking through steps I regularly travel to discover something different that will impact our customers.  I work in the food industry, and people's tastes are my pursuit.  We make one of the world's oldest staples--sliced bread.  We sell it in all the major supermarkets including Walmart in New York, PA, and New England.  We also produce specialty cakes, cookies, and artisan products for resellers and specialty stores.

As a regional producer, we do not have the global resources and scale of our competitors in the bread aisle of the supermarket. Yet, we have three products in the top 50, and are ranked #5 by IRI in branded bread product sales in Buffalo-Rochester--our primary market.  How do we do this?

Where Innovation Begins

1.  We stay close to our customers to know when to create a new status quo.

The relationship of people and food is interesting. In life, people generally resist change.  As children, our parents tried to get us to try something new, and we puckered our faces and spit out anything that was not what we already liked. 

Many people buy the same food every week at the grocery store, order the same Starbucks coffee every morning, and order the same dish when they eat out at one of their few favorite places.  

Yet, market signals do appear from time to time that the thinking and tastes of consumers do indeed change.  When an American society struggling with obesity discovered you could lose weight by not eating bread, we had a major market signal.  WHAT HAVE YOU INNOVATED FOR US?

Here is the catch--we need to know these changes are coming before they actually happen.  This is what authors Clayton Christensen and Scott Anthony term the "innovator's paradox."  When times are good and we have the time and capital to innovate, we often do not.  When times turn bad, it is too late to innovate. 

Although people started eating bread again after Atkins, the market is still signaling we will eat two kinds of bread--indulgence bread and healthy bread.  More and more customers tell us through their food spend "we want to eat healthy." 

The innovator needs to get out in front and innovate, telling their customers "we have heard you, and we know the way."  

TODAY'S LESSON:  Are you one step ahead of your customer?  Are your customers sending you signals that they need a change?  Do you have what they will need ready to go?

Next time:

2.  Identify the problem the customer needs you to solve for them.

Invention

“Invention:
I always wanted to invent something that would move around & make funny noises & would change the world as we know it & I forgot all about that until we had kids & now I see I came pretty close.”
― Brian Andreas

Will Obamacare Help or Hurt Innovation?

Today, I am going to try and catch up.  I have missed blogging because I am a CFO in my day job and it is annual board meeting time which has kept me busy for the past few weeks.  

First today, in the coming weeks I am going to delve into some mechanics of innovation.  By day, I work as CFO for a food producer.  The need to innovate in the grocery store aisle is intense right now, and over the past few years we have been honing our innovation process.  Over the next week I will sharing some of the things we have learned along the way.

No matter what side of the Obamacare debate you come down on, it is big news this week as The Supreme Court hears the arguments for the single payer mandate, commerce clause regulation, and whether the government in the future can make you buy a cell phone or broccoli! 


No matter how you slice it or dice it, we have a problem in American health care.  In our employer based system, many small entrepreneurial startups cannot lure in talent using the health care benefit because they cannot afford it.  This in turn stifles new business growth. 


In addition, the uninsured expect to be able to get health care at the hospital when they need it with no responsibility to pay.  Those costs are rolled into the fees charged the insured!  So, the argument goes, wanting privilege without responsibility needs to end by mandating that people get their own coverage.  This will increase the number of insured which helps health insurance companies. 


All of this sounds good, BUT.  What about the constitutional issues and the relationship between a government and its people, freedom, individual rights, and so forth?


I am not making this article partisan.  In my research, I found constitutionalists are writing much more on the issue of how Obamacare will effect innovation, so there are more articles here from that perspective.  I would appreciate it if anyone can provide more arguments for innovation from the pro-Obamacare point of view. 


No matter how this turns out, there is much room for innovation in the way we do health care in America. What do you think--will innovation be helped or hindered by Obamacare?

• Obamacare to Spend $1 Billion on Innovation (The New American)
• Obamacare's threat to medical breakthroughs (Orange County Register) 
•  Looking for Solutions in a Rapidly Changing Health Care Environment (Knowledge@Wharton)
• Taxing Medical Progress To Death (Michelle Malkin) 
• How Obamacare Is Putting Medical Innovation in the Hospital (AEI)
• Obamacare CER Institute Seen as Threat to Innovation (Heartland Institute)

Before we go today.. I love books of lists!  I loved this and hope you do too!

• The World's 50 Most Innovative Companies.  (Fast Company) 

Seth Godin on Bread and Innovation

In my day job, I am CFO of a parent company to a commercial bakery called Monks' Bread.  It is made by real monks.  Lots of people talk about Monks' Bread because it is a remarkable product.  It is not made by some global conglomerate, but by a community of Roman Catholic monks of the Trappist order at The Abbey of the Genesee.  I think a lot about innovation in the grocery store where our bread is sold, and the qualities we need in our team to be innovative.  Pulling all of these together is what this week's "Monday Startup" is about. 

Enjoy Seth's talk, and learn about innovative marketing!

• 40 Reasons Why We Struggle With Innovation (Innovation Excellence) 
• Seth Godin's Famous TED Talk on Sliced Bread--I put it up again five years later because I think his message got lost in the Great Recession, and because I am CFO for a sliced bread company--Monks' Bread.
• Redefining The Local Grocer (BusinessWeek)
• 20 Qualities of Innovators (The Heart of Innovation)

The Biggest Innovation Heist in History? Shanghaied!

Economic and industrial espionage has a long history.  Oddly enough, what is considered one of the earliest cases of industrial espionage was against China. In 1712, a Jesuit priest named Francois Xavier d'Entrecolles infiltrated Chinese manufacturers' system of making porcelain and then revealed it to European manufactures via a detailed letter. You can read all about it here.  Today, the tables are turned against us, and the traitors are our own people with a greed motive.

China is once again showing that the only business innovation they have a core competency is how to be thieves.  The Chinese economic espionage campaign has been in full operation mode  for years and "targets a swath of industries: biotechnology, telecommunications, and nanotechnology, as well as clean energy (Bloomberg).

Northrup Grumman's report to The U.S.-China Economic and Security Review Commission  details the extent of risk the USA currently faces.  "Death By China: Confronting The Dragon" is also a good treatment of the subject. 

So, this raises the issue of innovation.  What opportunities exist to develop counter-measures to the threats we face in a cybernomic war with China? Counter-security, and counter espionage are obviously ongoing.  What we need to develop more is technology security so that when the Chinese try to hack and steal trade secrets, the code or device they are working with erases, releases counter-code, and becomes non-functioning. 

We certainly do not want Iran or China sending more model airplanes to our Presidents mocking our requests to please not steal our innovations. 

Monday Startup: Stifled Innovation

I have worked with several organizations over the past 20 years that stifle innovation.  I aim to be a visionary leader.  For as long as I can remember I have been the one in a group who asks, "Why do we do what we do?  Why this way?  Why not another way?  Is there a better way?"  In order to create value for owners I have worked for, or accomplish the mission of non-profits I have led, I tend to see the big picture of where a strategy (or lack of one) is leading and then challenge the status quo.  

Right now, I am involved with two non-profits and both struggle with growth because of leaders who are unwilling to engage in creative destruction.  They are not willing to cannibalize their own outdated models and structures.  Both are doomed to die unless they change. 

 In many cases, I have seen two main reasons for this. 

First conservative agent/managers who do not want to rock the boat or fail in the eyes of their owners, thus they do not take risks which could add value to the owners in order to protect themselves instead.  Leadership that resists innovation and change out of fear and self protection develops a culture of non-innovation around them.  Other "yes men" who want to preserve their jobs do not have the courage (stones, balls, etc.) to challenge their bosses, thus group-think takes over. 

Second, ignorant decision makers who do not understand markets, market forces, or the competitive environment believe myths. I have observed owners who think consumers should buy their product or donate to their cause because they always have.  As long as there is money, people will want to see value associated with investment.  Risks must be taken to keep making things better whether profit in a business or a better world in the case of charities and non-profits.


Most often, organization and companies that resist change plateau and then experience a long slow decline.  Why do these change management issues occur?

•  Three Issues that Stifle Innovation, and How to Overcome Them (Innovation Coach) 
•  Is Your Culture Cryptonite for Innovators? (Innovate On Purpose)

• 7 Deadly Sins That Derail Innovation (The Globe and Mail)

   

Monday 3/5 Startup Cleveland Clinic Innovation

It's Monday.  Time to start up our thinking for another week ahead!

Last Friday, I spent the day at The Cleveland Clinic with a family friend whose wife was having vascular surgery. What an experience OF WELLNESS!  This is the hospital you want to be treated at.  

The excellence oozes everywhere.  Logic Junction's Wayfinder Touch Screen Avatar Kiosk was very helpful placed right on 2P at the entrance from the parking ramp.  Everyone who works there has clearly been trained to take care of people not only medically, but as ambassadors.  I had a nurse and a lab tech ask me if I needed directions when wandering around looking for which way to go to my destination.  We ate very healthy food in the building P lobby.  I wandered into an area where there was literature about their emphasis on 2012 medical innovations--I share them below. 

• Top 10 Cleveland Clinic Medical Innovations of 2012 (Cleveland Clinic)  Get the APP too! 
•  Cleveland Clinic extends innovation collaboration (Cleveland.com)
• Innovations in Surgery (Cleveland Clinic Center for Continuing Studies)  Also the educational webcasts are great innovative ways to educate people about their health!

Does Branding Still Matter--To a Five Year Old--Yes!

Startups Stuff... Word Press for Startups (How To), A Treasure List of Startup Links, Romney and VC Evil?

What I read today was first a great treasure list of startup links by Ty Danco. 

Also, since my wife is working on a startup business, here is a great link for startups on how to use Word Press to get your business rolling. 

In case you are not interested, however, I am posting a great article on venture capital jobs.  Since Mitt Romney is taking such a beating in the liberal wing of media-politics, the question is, should he be demonized for his time at Bain Capital? I would love to hear from you and have opened up the comments to make it easy to leave one!

Also, I am adding links in my blogroll to other great resources I find, so keep coming back for updates, and if you are a blog about innovation, entrepreneurship, or startups, send me an email.

The Big List: The Best and Worst Startup Stuff in 2011 (OnStartups.com)

Word Press For Startups (47 Hats)

Venture Capital: MBA's Dream Job? (Startup Economy)

Monday Startup: Secrets of Going Viral on Social Media, 10 Tips to Go Viral

I have been working on a podcast and webcast for What's New America. Going viral and social media are in my mind every day as our traffic is growing.  Thank you for coming and visiting us often by the way!!!  Let's start the week with some real fuel for our thought engines as we wait for NASCAR rain date!  Go Danica!!!

• "The Hidden Secrets of Social Media and Viral Advertising" (Jonah Peretti)

• Here are 10 Tips from BuzzFeed to Make Your Content Go Viral (Both Sides of The Table) 

• Fostering The Next Generation Of Social Entrepreneurs Through Service (FastCoExist)
  
• American Innovation: Nope, Not Dead Yet (The Atlantic)
   
• Building the Company Versus Building the Business (Only Once)
  
  

Watch Bloomberg The Mentor

This is how we grow a real recovery! Watch "The Mentor." http://www.bloomberg.com/tv/shows/the-mentor/

Obama and The R Pack: Pass a 100% Capital Gains Tax Exemption for Startups!

Politicians have a great opportunity to win votes and re-election in the 2012 general election cycle: pass legislation to promote investment in small businesses!

A permanent capital gains tax exemption in C corporations alone will generate a 15% increase in real return to investors.  Startup businesses under five years old account for almost all net growth in jobs in the USA over the past 25 years.

This is the kind of policy that can grow GDP and jobs.  Obama's proposal to permanently exempt startup capital in C corps is also good economic and political strategy.  The R Pack (Santorum, Romney, Gingrich, and Paul) would do well to make this a leading issue in an economic driven election.  We need leadership first, competition and name calling last!

Equal credit on the R side goes to Senators Moran and Warner's "Startup Act," and on The D the "Small Business Tax Extenders Bill" (text) introduced by Senators Snowe and Landrieu.

Write your Congressman: Senate and House (or call).

Encourage them to support these proposals and pass them immediately.  Let them know putting jobs for Americans first will go a long way in keeping their job on The Hill.  Tell them blogs like this are WATCHING what they do and making sure the blogosphere and social networks are aware.As a CFO who in former years served as a campaign manager for a New York candidate running for Congress, I know both sides of this issue.   President Obama is truly on the right track here, as are these leaders in the Senate and House. 

Legislators need to look for ways to spur investment and capital flow to small businesses beyond the provision to C corporations to S corps, LLPs and LLCs. 

Section 1202 of the Internal Revenue Code allows 100% exclusion from federal taxable income of gain realized (up to $10,000,000) by investors who made qualified investments after September 27, 2010 and before January 1, 2012.  

Joe Wallin does a great job of laying out the technical tax laws on this.   

• President Obama Proposes to Expand and Make Permanent Zero Capital Gains on Small Business Investments.  (Startup Law Blog)

• Capital Gains Tax Exemption for Investment in Startups Would Help New Companies Cross the "Valley of Death.  (Kauffman Report)

The Job Leak in America

The message I put forth over and over is simple: Innovation and entrepreneurship are the keys to a growing economy or individual business.  This is especially true during a recession and tepid recovery period which he have been in the past four and a half years. 

The study "Starting Smaller; Staying Smaller: America's Slow Leak in Job Creation" by the Kauffman Foundation suggests that the country faces a fundamental employment challenge that pre-dates the recession by many years.  This is a long-term trend that the researchers call a slow jobs "leak."

New businesses continue to generate most of the economy's net job gains.  A "job leak" occurs when new firms start up with fewer workers than historic norms, and add fewer workers as they grow.
 
I am surprised The Republican presidential candidates  have not been on top of this!  This is another indictment of the failed policies of the past two administrations--Bush and Obama--both have presided over "job leak."

Analysis of government data shows that since the middle of the last decade and perhaps longer, the growth path and survival rate of new businesses means they are generating fewer and fewer new jobs. The cohort of new firms that started in 2009, for example, is on course to contribute one million fewer jobs in the next decade than historical averages would suggest. 

• Starting Smaller; Staying Smaller: America's Slow Leak in Job Creation (Kauffman)
  
  
  
  
  
  
  
  

Innovation and Entrepreneurship Defined

Periodically, I like to share the basic definitions of what this blog is about.  New people come to read, and somewhere buried in the archives are the basics.  I always believe that in anything we do in life, success always come as a result of mastering the basics. 

Joseph Schumpeter coined the term “creative destruction” to describe the process by which innovation causes a free market economy to evolve.  Creative destruction occurs when innovations make long-standing arrangements obsolete, freeing resources to be employed elsewhere, leading to greater economic efficiency. 

An entrepreneur is someone who organizes, manages, and assumes the risks of a business or enterprise. An entrepreneur is an agent of change. Entrepreneurship is the process of discovering new ways of combining resources.

Teaching Kids Financial Fitness

One of the gaping holes in the education system is the life skill of personal finance.  Here is a great way to teach kids about money!  Centsables

Starting a Startup Business

Where I live, February is the worst weather month of the year.  We spend a lot of time inside and travel as little as possible.  February is a good month to read and think.  

Today is "Startup Monday," so let's read and think about it! 

• How to Start a Startup by Paul Graham
• Startup Tools collected by Steve Blank
• Interview with Emmet Gowin by John Caponigro
• Jessica Livingston: What Stops Female Founders?
• Dennis Crowley: Top Five pieces of Advice for Entrepreneurs
• Max Levchin: Greatest of Max Levchin's Lessons Learned as a Young Entrepreneur
  
  (Entrepreneurial Design)
  

Will Manufacturing Make a Comeback?

One of the fundamental premises of "What's New America" is that innovation and entrepreneurship are drivers of economic recovery and expansion.  As America continues its recovery from the Great Recession, more and more economists are theorizing that the rising cost of doing business in China and election year politics are bringing manufacturing home from overseas. 

Along these lines, MIT researchers are conducting a two-year Institute-wide research project called Production in the Innovation Economy (PIE) focusing on renewing American manufacturing. The central thesis of this study is the United States still produces a great deal of promising basic research and technological innovation that needs to be translated into economic growth and new jobs.

• Production in The Innovation Economy (MIT)

Oil Pipeline and Keystone

As the debate about the Keystone pipeline continues, I found this a cool set of information.

Get Over the Hump: Leadership To Come Out of Recession

In The USA, we often refer to Wednesday as "Hump Day," the mid point of the week which once this day is over, it's only two more days till the weekend!  

The economic recovery we are in cannot seem to get over the hump.  Maybe where you work cannot seem to get over the hump and breakthrough.  Today is devoted to getting over the hump. 

• The Bad Workplace Hump: Toxic Versus Cooperative Behaviors At Work (International Journal of Leadership Studies )
• Innovating in Recessionary Times (Monitor Innovation)
• The Bad Economy Hump (Milken Institute)

Measuring Innovation, Davos, New in High Tech--It's Tech Tuesday!

Today is Tech Tuesday where we begin our day with a focus on the technology sector.  

The competitiveness of companies today is highly dependent on the ability to be innovative, i.e. constantly exceeding customer expectations, and challenging competitors. 

• Measuring For Innovation: A Guide For Teams (Innovation Management). 
• Insight from Davos: How Global Thought Leaders Talk About Innovation.  (Forbes)
• What's New in High Tech? Where are venture capitalists placing their bets on innovation and entrepreneurship?  **Note: Audio takes 27 seconds to begin in the video below...
  
  
  
  
  
  

Weekend: Personal Focus--8 Nations of Innovation

Rick Warren is a spiritual leader, author, and philanthropist.  This is a great TED talk on how to innovate your own life. 

The Role Of Innovation in Competitiveness

We now live in an innovation economy in America.  As Dean DiBiase says, When old solutions are applied to new challenges, the results are never good. 

While America cannot rely on its old place in the world, innovation keeps us moving ahead of the rest of the world!  Innovation is a word that many today believe is hard to define.  It seems it is akin to Supreme Court Justice Potter Stewart who said he couldn't define pornography but would "know it when I see it."

Here is one definition of innovation to help you know it when you see it:

1. 1  The introduction of a good (product), which is new to consumers, or one of higher quality than was available in the past;
2. 2  Methods of production, which are new to a particular branch of industry. These are not necessarily based on new scientific discoveries and may have, for example, already been used in other industrial sectors;
3. 3  The opening of new markets;
4. 4  The use of new sources of supply;
5. 5  New forms of competition, that leads to the restructuring of an industry.
   

Michael Porter of Harvard, one of my favorites on competition and innovation, defined innovation well:

0. to include both improvements in technology and better methods or ways of doing things. It can be manifested in product changes, process changes, new approaches to marketing, new forms of distribution, and new concepts of scope . . . [innovation] results as much from organizational learning as from formal R&D.
   

What I am reading about innovation today:

• Edison's Approach to Goals (Innovation Excellence)
• What Does Innovation Really Mean (Bloomberg Business Week)
• The Role Of Innovation
• Watched Michael Porter's great talk given in Saudi Arabia, "Innovation and Competitiveness."

Tech Tuesday: Shale Gas

Not all technology innovation is in computers and smart devices. 

In live in western New York State.  The Marcellus and Utica shale deposits are big news in our area. As an investor, one of the most interesting companies I am looking at is AbTech, a company whose polymer technologies developed for oil spills are being adopted by the fracking industry.  Once their smart sponges absorb wastes they permanently bond and cannot be squeezed out.  The fracking water problem is able to use this technology to clean and re-use water on site at wells.  

I think  one of the arguments against shale gas innovation just got silenced.

View AbTech Corporate Video

From MIT Technology Review

• View info-graphics of natural gas resources, production and consumption.
• See how a drilling rig is moved.
• View an animation of how horizontal drilling works. 

Monday Startup

Mondays are the day we get our brain back in gear for another week of racing with rats to find new cheese.  Yes, I did read "Who Moved My Cheese!" 

• This week Apple  said they are going to change the textbook industry.  I don't know about you, but with two kids and a spouse in college, every time I pay over $100 for a textbook I say to myself, "This is such a racket.  There has to be a better way."  Is the Apple initiative a better way?  Since Apple likes to control the user experience--something I detest about Apple--I can see how Apple is trying to build a dependency on their devices in the textbook market.  (FastCo.Exist)
• Last week, here in the Rochester, NY area where I live and work, Kodak finally went bankrupt.  A friend wrote me and asked why this happened.  Here is how I responded:
• Kodak was the king of film and then invented digital. As other industries and companies began to envision how they could use digital technology in personal computers, photography, and mobile devices, Kodak hesitated on putting themselves of out the old film based business. We call this cannibalization--put yourself out of business so someone else doesn't. That opened the door for competitors like Canon and Sony to leverage digital technology in cameras and mobile devices. Kodak then fell behind the curve and never caught up. There were also a bunch of financial decisions they made that Wall Street analysts punished them for. Stock options for employees dropped in value. Good managers then started leaving and the death spiral began.  Let this be a lesson about hesitation in company strategic planning and innovation!

• Last for today, CROWD FUNDING has long been used by charities and non-profits to raise money for projects.  In these days of banks being encouraged by Federal Reserve policy to not lend money to small businesses, crowd funding has faced the hurdle of Securities and Exchange Commission laws making this source of capital difficult for small business.  That seems to be changing (Entrepreneurship). 
• 
  
• 13 Crowd Funding Websites to Fund Your Business
• 13 Crowd Funding Sites for Social-Cause Entrepreneurs
• How to Find Venture Capital Investors For Your Company

Ideas...

What I am thinking about today...

•  Where Good Ideas Come From--(Ted Talk by Steven Johnson)
• What is An Idea Connector and Are You One?  (The Grindstone)
  
  This is the "open" innovation model.  Creative people are often stifled in organizations led by non-creative, non-innovative managers or owners.  Creative people are looking for a place to share their ideas and most often hang out outside of work with other creative people.  Think about your organization or company, find your idea connectors, and get connected!  It may just help you develop the next big idea!
  
  
  
  
  
  
  

Why Small Businesses Fail

Had to share this one via Barry Ritholtz--click this link or the graphic , then click again to enlarge

Charitable Entrepreneurship

As a CFO for a non-profit in my full-time day job, and President of a smaller non-profit in my spare time, I am a student of capital campaigns and charitable giving.  John List of The University of Chicago is a leader in studying donor giving to charities.  Read, comment, and build your organization!

Charitable giving is an increasingly important component of our national economy comprising over 2% of GDP in 2008. However, relatively little is known about what drives people to give to charities. This line of research includes large scale field experiments to investigate charitable giving.

Farming Innovation To Feed The Growing World

After all the holiday eating, I am getting back in the reading and writing saddle thinking about the economics of food.  Some of my readers may not realize this, but I am CFO for a non-profit organization that is the producer of the fifth largest branded sliced bread in the Buffalo-Rochester-Erie, PA market, and a regional player in New York, New England, and Pennsylvania market.  We also have a 1400 acre farm operation.  

• Agricultural R&D, technology, and productivity (The Royal Society) 
• Global Food and Farming Futures (Foresight).  This is some heady research, but for those who want to take the time to dig in, a feast of information.  
• Innovation in farming technology--two interesting videos.