Innovation is the Real Job Creator

Everyone seems to think they are a job creator, you hear it everywhere in the private sector and public sector, and our politicians talk constantly about how they create jobs.  This attention and discussions proves that we all believe the only way to prosperity is by creating jobs.  Everyone says they have the solution, with their own spin and agenda.  Here is a presentation of my case that real jobs are only created by innovation.

For the economy to grow (2% is not growth) we need to get people back to work to productively create innovative products and services that are sold globally.  These workers make money creating these products, they spend this money which in turn creates wealth and grows the economy.

Apple, how do you view this company?  They are an innovative company that comes out with products that are on the cutting edge, consumers around the world stand in long lines to purchase their products at high prices because they perceive value.  How did Apple get there?  At one time Apple was a failure; but strong leadership, vision with a plan is what turned Apple around and into the successful company they are today.  Is Apple creating real jobs that add value?  I believe so.

Ford, how do you view this company?  They are an innovative company that avoided bankruptcy by being proactive, taking chances and dramatically changing the culture of the organization.  It is worth noting GM and Chrysler choose a different path and needed government help and entered into bankruptcy at the same time and in the same industry.  How did Ford get there and avoid bankruptcy?  Strong leadership, taking a chance and a vision with a plan that turned into the successful company they are today.  Is Ford creating real jobs that add value?  I believe so.

There are many other examples of companies challenging themselves to do better and that is their solution to creating long term value in the marketplace.  We also have seen plenty of examples of companies who were at the top, got lazy, took their eye off of the ball and regressed to the old ways and failed.  Success is a terrible teacher and many times the leaders stop the challenges and slip into meritocracy and then eventually fail.

Many people believe companies sitting on cash and not hiring is the problem, they believe that is why our recovery is so slow.  They believe companies should just hire people with that cash and the US would be back into “the good old days.”  Companies are sitting on cash because they need a reserve for tough times; the ones that did not have cash on hand in 2008 went bankrupt.  The only time a company spends money is if they need additional resources that adds value.  Why spend the money if you get no value added for it?  We do not do this in our personal budgets, why do we expect companies to do it?

Currently we have a record numbers of people who are not participating in the workforce, working part time, under employed or on disability.  This growing trend is not our friend.  These numbers are facts and cannot be disputed, this is not sustainable and will cause further decline of our standard of living and continue to be a drag on our economy.  Many believe this generation will be the first to not do as well as the previous, they are expecting a decline.  There are valid arguments on both sides; in any case we still need jobs that add value to make the economy grow.

The solution to this problem is to create jobs that add value.  How can this trend be reversed?

Innovative ways to continuously improve a product, service or organization is the way to not only become more efficient but create real jobs that add value. This is not criticism; it is always asking oneself “how can I do better?”  Asking that question is not telling people they are bad, it is a challenge to be innovative in ones thinking to create further value.  This ensures a viable, effective and sustainable organization.  A true leader challenges the organization and expects them to continually improve.  I believe this is what Apple and Ford have done.

     “Work smarter, not harder”

     “Find a way to make a better mouse trap”

What role should the public sector play in creating innovation?  We have great examples of how the government entities have helped encourage such activities for the private sector.  Here are some I have seen that effectively worked to support this innovation effort:

• Communities that create and attract diverse educated citizens with a high quality of life at a reasonable tax rate.  They are ahead of the curve insuring the community creates value for its citizens and businesses and are good stewards with their money.  This attracts talented employees for these innovative companies which grows the local economy by adding true value.

• Automation Alley – I have dealt with them from their inception and see their charter to bring businesses together in an environment for them to collaborate and create innovation together.  They have not grown their staff just to add employees; they continually challenge each employee to be creative and continually add value.

• State of Michigan – I have dealt with them in the past few years and have seen them create a real business friendly environment which has attracted and retained businesses.  They have further plans to put Michigan in a better competitive position to attract more as they make changes to the property tax on business investment.  This change will be the final piece that will encourage business to locate and invest here which in turn will create real value added jobs.

• I attended the third annual Accelerate Michigan Innovation Competition that was held in Detroit from 13-15 November.  This event was created and hosted by the State of Michigan to set up an environment for investors to meet startup company’s ideas of creating value.  The State mentored these CEOs and students on how to prepare present an effective business plan to investors.  They set the stage, made the introductions and got out of the way to let each make their own decision.

The key elements in these business plans were:

• Management team bios and expertise
• Capital raised to date
• Current capital amount being requested
• Revenue in the past year
• Revenue projection for next year
• How will you spend the capital being raised?
• Company description
• Competitive advantage

Each company had 15 minutes to present their case and answer questions from the investors.  It was the TV show “Shark Tank” without the drama.  I was very impressed with the presentations and ideas on how to create a new innovative product in Michigan.

Now here is the important question, in this political environment, will the investors take a chance and risk capital to invest in one of these many innovative ideas?

If they choose to invest, their tax liability will be much higher.  If they choose to not invest, they will just keep what they have and not take on any risk.

If you were an investor, what path would you choose?  Risk with a higher price, or nothing and keep what you have?

This is key to creating real jobs; if we want real jobs we need innovation.  If we discourage innovation we will not create real jobs that add value.