Fabulous question. I read somewhere that Dell is still the second largest computer maker. Dell is a leader in efficiency. Efficiency is the answer. The inefficiency of business in America in general is almost astronomical. Then motivation. People, if lead properly, can develop the right motivations. There are plenty of people that need to work, but don't because they do poor work. They need to be lead in the right direction. People in general are not working together. We need to be smart about all this.

posted 8 months ago

Get NASA to lead innovation in multiple fields. Have NASA "hold the hands" of the innovators. Fund cooperative work with NASA and new business. Tell the public it is time to use the information we have been paying for. Be ready to lose 40% of your gov.investment. The couple of jewles that come out will advance the economy and infrastructure.

posted 8 months ago

Chad,

they should abolish most of the business related legislation wirrten after the year 1929, and then they should drop dead.

Come to think of it, this is exactly what American business wants and actually gets. Only instead of killing the policymakers, they just move all that they can move elsewhere, to place where there are essentially no laws.

I can provide some "positive" ideas too that they could implement (like, setup a fund to rapidly and without hoops jumping pay brilliant inventors lots of money for publishing smart ideas, cough, cough, cough :) ) but pretty much all such positive actions would be of minimal significance. It is the NEGATIVE actions that are essential - namely, stop choking American business for God's sake. Stop the insane taxation, stop moronic regulation, stop affirmative action, stop telling people how to run their business. I mean, put down your portfolio and step away from the voting button, sir.

Oh, and here is a nice "positive" measure that would help a lot. Pass a law saying that no corporation with more than 100 people can have an exec above a certain level (at the very least CEO, CTO, CIO and CFO, but preferably down to the VPs) who has an IQ below let's say 140, with an emphasis on high verbal IQ. Execs in strategically significant corporations with thousands of employees must have higher threshold IQs plus they should show some decent analytical ability and prove it in a PhD dissertation defense style proceedings before a jury of their peers both from industry and government

Likewise no official above a certain level that has anything to do with business regulation may have a below threshold IQ. For lower level managers lower thresholds can similarly be imposed, maybe as low as 110 for anybody who manages anybody else in a white collar setting. IQ will be measured in government controlled exam rooms, sort of like they do ASVAB. Once the purge and "total changing of the guard" is done in this manner, American business will be well on its way to bloom like a garden.

Cheers,

Michael

posted 8 months ago

Chad, adjust the tax laws to incentivize innovation, no different than anything else the government wants to encourage.

posted 8 months ago

Chad: Tricky question. Policy can sometimes be a bulldozer when a trowel was needed. Policymakers can lead by example. Can use the omniscience of federal data to illustrate and map types of innovation, successful as well as potential. Can find the innovation switch that people could behaviorally turn on when useful. Can recognize diverse role models so that interested folk can tune in on that mode. Can find analogous innovators, possibly not in small business, which might have relevant skills that overlap. Can identify more of the barriers to innovation and have incubators where they are not as prevalent, e.g. not subject to common cultural indoctrination. Can provide canned toolsets that increase likelihood of innovative solutions, e.g. breakthru-browser. This country is a template for others so they will probably pick up the skills also. Hopefully the optimism does not find itself without continuing followup leadership in the next and following terms. May not require an Innovation Agency. Thanks.

Links:

• http://blog.wired.com/wiredscience/2009/03/predictrecall.html
• http://www.plosone.org/article/info:doi/10.1371/journal.pone.0004803
• http://delicious.com/johnro/innovation

posted 8 months ago

"Small business innovation" is a myth. Truly innovative businesses are those that grow large very quickly.

Between 1980 and 2005, 7,454 American companies went public. Of these, 2,019 have gone out of business, 5,048 have not reached $1 billion annual revenue threshold, and 387 have reached $1 billion annual revenue threshold and as of 2005, accounted for 56% of employment and 64% of market value in the group. Translation: 5% of all companies in the group created 56% of all employment and 64% of the market value created by the group.

So the answer appears rather obvious. The policymakers need to realize that "small business innovation" is a phantom goal. There are many good things that can be said about small business (and there are many good reasons to support small business), but innovation simply isn't one of them. If you want to support small business, you need to do something about the cost of environmental compliance (which tends to be much heavier on the small business) and the cost of health insurance (which many small businesses can't afford to provide even to owners, not to mention rank-and-file employees)...

posted 8 months ago

Policymakers must separate small businesses into categories based on size. With each size comes very different needs, and very different contributions to the economy. The most valuable in job creation are micro-enterprise companies with fewer than 10 employees. These are also the most fragile in any economic downturn. The most evident part of any recession is the vacant storefronts in every neighborhood. Policymakers need to find a way to entice landlords to keep storefronts filled... and Main Streets vibrant. Without this crime statistics soar. There are hundreds of thousands of part-time small businesses just waiting for the moment when they can "quit their real jobs" and go full-time with their passionate pursuit. They need "specialized" small business training. Training that can't be supplied by "generalists".

Links:

• http://www.ArtsBusinessInstitute.Org
• http://www.AmericanCraft.com
• http://www.AmericanMadeAlliance.org

posted 8 months ago

Dear Chad:

A timely question. As a consultant to small business start-ups and family business, I have seen innovators and entrepreneurs struggle with the problems of birthing and nurturing an innovation or new business. The major problems are not the lack of ideas but lack of the marketing and financial skills to husband their business concept through the difficult process to successful commercialization.

I think a major part of the problem is the lack of education at the secondary school level on such things as personal finance and the social skills required for effective marketing.

At one time children could learn frugality and the skills to be frugal from parents or grandparents, but today with instant gratification through easy credit, credit cards, enabling parents and a sophisticated marketing techniques that seduce children into their social purpose as consumers, those skills are being lost.

The reliance on technology to make the kind of calculations to manage and account for money, have produced a generation which has difficulty making change change in simple transaction.

I realize the second point might seem out of place in the world of MySpace and FaceBook, but electronic social skills are very different from face to face interpersonal skills. Marketing and sales require a long range perspective and not just the short range sales cycle perspective.

I have met too many "salespersons" who attempt to sell their product before they have taken the time to sell themselves as trustworthy persons representing a trust worthy company with a trustworthy product. They usually fail more times than they succeed. Yet this is the model most innovators have of the sales process, which is why they fail to move their idea forward to commercialization.

Basic training in interpersonal skills is critical, especially for innovators and entrepreneurs who really have only themselves to sell to an Angel or VC investor. Communication skills (both sending and receiving information) are another part of this. Learning to listen is as much a business skill as pitching a line.

The point here is that we need to start at an earlier age preparing the next generation be become more entrepreneurial and innovative. We can do this by giving them the skills needed to transform an idea into a concept and concept into a business.

It is not just a matter of changing the environment for financing or regulation, it is training those who will depend upon and be subject to them to be better prepared at managing this part of their small business that is important.

At the Federal level, the best I think we can expect is promote attitudinal change on a generational scale which begins with at the secondary school level.

posted 8 months ago

Michael and Nick have some good ideas and points, but I assume your question is how to encourage small business, not how to make huge technical "breakthroughs." So I'm talking about ANY type business.

The #1 issue is capital. SBA loans have traditionally been a pain to apply and receive, and if the company doesn't make it, which many won't no matter how well thought out and managed, it's hanging over the owner's head as they try to move on with life.

For example, I could use an angel investor for anything from $500K to $10M, and that could probably produce 300+ jobs that are pretty well paying, but the chances of finding such an angel isn't good. If I could get a government SBA "loan" where they take an equity interest I would be interested if there was a clause where I'm not personally on the hook for millions if it doesn't make it in the long run. (In an economy like this it can kill even many good businesses because people just aren't buying anything.)

Second, multiple levels of regulation are killers. There could EASILY be coordination of filing/reporting one time for all local, state, and federal reporting.

Third, as far as INTERNATIONAL competition I probably can't give as good an answer, BUT I can tell you requiring US companies to operate under restrictive rules and regs and then encouraging big companies to go to third world companies is crazy. Personally, I think NAFTA and CAFTA were stupid - there have been hundreds of thousands, if not millions, of good paying jobs go to Mexico and Central America. If we want to maintain a standard of living that is the class of the world we can't cut our own throat and let jobs go to Vietnam, China, and Cambodia because of cheap labor that the government ought to raid if it was in this country for labor violations.

I worked for a division of a multi-national (Japanese) in Georgia before coming back to Kentucky because of family obligations. About 6 months after I left that plant closed and sent 525 jobs to Mexico that paid about $1.50/hour fully loaded. They employed about 1200+ down there because of going to manual production lines because labor was cheap, equipment was considered expensive. So even though they have a lot of problems in manufacturing down there, no one seems able to resist "cheap." Thanks loads to both political parties that love screwing the rest of us.

By the way, the government COULD enforce laws and kick out illegal aliens. I'm frankly tired of quoting jobs against companies that are either illegals themselves, or use illegals, don't pay payroll taxes, and don't have licenses or insurance, including workers' comp. I'm not holding my breath since both parties seem to like getting their yards mowed and grapes picked by cheap illegals.

posted 8 months ago

One problem has been the general reallocation of resources away from investment, accentuated by dramatic reduction of American investment into research and development. This below average innovation and loss of competitiveness has diminished America’s international standing.

To address these losses policymakers could do a couple things. Reducing taxes on or providing grants for R&D/investment at a small business level. This could be an effective avenue to immediately generate growth at a local level.

The reduction of available money (credit) for small US businesses was hampering many and I am glad to see the new administration addressing this.

Now I’m not talking about big sums, millions, for “bigger” small businesses. I propose smaller sums, tens of thousands, for the little small business the mom and pop general store, the construction worker turned contractor, etc…

Those that can afford to invest into their own businesses themselves should be rewarded with tax savings and incentives to do so. Those without the capital should be given direct access to R&D/investment funds or grants.

I know that some programs are out there for the small guy, but we need to overhaul/simplify accessing these and increase public awareness and use of the programs to improve innovation and competition at a local level. This will radiate out and improve the United States standing worldwide.

Links:

• https://www.cia.gov/library/publications/the-world-factbook/geos/xx.html#Ec...
• http://www.nytimes.com/2009/02/25/technology/25innovate.html?_r=1&partner=r...

posted 8 months ago

Simple - they can get out of the way, let businesses do business.

posted 8 months ago

1. Lead collaboration-join the cloud.

Collaboration is critical to innovation, but not necessarily in the traditional sense. The cloud (cloud computing) offers an environment where the government can provide information through new applications, platforms and software to better serve the needs of small business.

Take for example Data Ferrett (http://dataferrett.census.gov/). It provides one view of data from the government statistical agencies (and in some cases state and local), and empowers the user to move seamlessly, and share knowledge at their choice. The same concept can be applied for business use.

2. Increase supply-deal with capital issues.

I read about a student in China who was sure that someone in their country would figure out the solution to a complex issue (as opposed to the US) simply based on the fact that they had a billion more chances than the US did based on population. Simple but in theory true. As others have noted, increases the effectiveness in important. Increasing the numbers of small businesses who are effective is also important.

In my work we have found that capital issues that thwart many small businesses before they can develop and innovate. Stick a pin in the current financial crisis and look toward the probable future. The financial sector will rebound and emerging will be the same capital constraints for small business if we are not better at using information to identify viable business risks.

For example, policy to address information gaps in crediting scoring individuals (used for business lending) and evolution of business scoring is critical. In the US, while in theory 100% are visible in credit markets, it is estimated that 35-54 million Americans are not. Further simulation indicates that they are not risker-- with more information the scores would generally mirror the scored US population. Increase in the proportion of covered correlates to increasing in lending and GDP worldwide.

3. There are an myriad of other options but first we must acknowledge information as the infrastructure of the future (just like railroads and highways were the development infrastructure of the past), and sharing as a key to competitiveness.

posted 8 months ago