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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.

 

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.

 

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Daryl Patrishkoff November 26, 2012 at 09:33 PM
Dennis, Warren Buffett will make the investment and pass the added costs on to the company he is investing in. So the cost of investment just went up to the companies that create innovative products to raise capital. Warren Buffett will not make a stupid decision, it is a math problem and he will make his normal margin, the cost just went up.
Joshua Raymond November 26, 2012 at 09:41 PM
Daryl, I would like to add that education is a key component of innovation. As a district, we need to look at what will make students into successful innovators, entrepreneurs, and highly qualified employees. I believe we could look at some programs and philosophies that are used in other public, private and parochial schools that aid students. Cristo Rey has an excellent program where students attend school four days a week and work in a business for one day a week. They learn responsibility, office etiquette, and business skills. They also gain a realistic view of the world and guidance on what field may be a great fit for them. As a community, we could support our students by hiring and preparing them for after graduation. Many private schools are excellent at providing differentiation. While this is key to retaining students, challenging each student at their individual level leads to success as even top students learn to work hard and overcome obstacles. While many of these students have a hereditary advantage, many of these schools challenge all their students to reach their apexes. I believe we can do better as a district on this and I would like to help our district achieve this.
Joshua Raymond November 26, 2012 at 09:42 PM
Some countries help create a diversified workforce through aiming at the individual strengths and interests of their students. While STEM schools are becoming popular in some areas, some phenomenal skills of students are being overlooked because they don't fit the academic mold. My brother has off-the-charts spatial skills and is extremely innovative with anything mechanical, but in a school that focused on math, reading, and writing, the tested subjects, he became disillusioned. Instead of helping him develop his skills, school became a prison that graduation freed him from. How many of these innovative individuals are overlooked? If a student's abilities and interests don't lie in academic fields, we should look at helping them become topnotch mechanics, artists, or entrepreneurs or employees in other fields. Some countries provide paths for these students to prepare them for success in these fields, but the push towards college ostracizes many of them in our country. Let's provide opportunities for them.
Joshua Raymond November 26, 2012 at 09:43 PM
We also should honor students and alumni of our schools that are successful in every field. We know Peter Vanderkaay and Madonna went to Adams, but what about leading scientists, entrepreneurs, or businesspeople? There are many pictures of All State athletes, but why not All State academics? Why not have a wall of fame honoring their success so that our students can be inspired by them as well? I believe that a focus on innovation and success of alumni in all fields should be a priority for our district. We need to bring a higher focus on creativity. While I believe standardized tests are important, we need to do away with test prep and teaching to the test. This uses up so much time that could be spent stimulating and developing the creative minds needed for innovation. Is RCS top in the MEAP because our students learn more or because they are better prepared for standardized testing? I realize the emphasis the state and federal governments place on standardized testing, but our aims must be nobler than jumping through their hoops. Few jobs require filling in bubbles, but most require creativity and innovation. How do we take our district from good to great? How do we make sure that all our students are graduating with the right innovative skills, whether they are academic, skilled trades, artistic, combined with the abilities to work hard and overcome obstacles? These are questions we must doggedly pursue answers to.
Daryl Patrishkoff November 26, 2012 at 09:58 PM
Joshua, You are correct; we need innovation encouraged and developed in the schools. The conference I attended in Detroit had students presenting their ideas with prizes awarded as an investment into their idea. The investors took the time to listen, give advice and encourage these young people to keep innovating with great ideas. The State mentored them along with the CEOs and the presentations they put on were very mature. Being in the engineering business, I am also very impressed with the robot competitions I see at high schools and colleges. They pair up professional engineers to mentor some of these groups to encourage students to continue their education and enter the engineering field. I personally am involved with the ASBE Foundation in which we mentor and encourage high school students and teachers on the automotive design engineering field. These are great programs to help the teachers understand what industry needs in curriculum and the students get encouraged to pursue this career. Our capstone event is a Design Competition where the high school students present their design and we award scholarships to the winning students.

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