Dow 10K: Why One Pro Thinks It’s Important
October 14th, 2009 | Posted by stockPosted by: Ben Levisohn on October 14, 2009
The Dow Jones Industrial average closed above 10,000 today for the first time since October 2008. After having watched the blue-chip benchmark cross the magical five-digit figure numerous times in both directions over the past 10 years, the predominant reaction from market watchers has been a collective shrug.
Barron’s urged its readers to “Tune Out Dow 10,000 Maniacs.” The Wall Street Journal spent its time focusing on an impending Standard & Poor’s 500-stock index milestone. Even BusinessWeek has asked if Dow 10,000 is just another number.
They’re right to be skeptical. Too much is made of the psychological impact of round numbers, whether its Dow 10,000 or S&P 500 1100. Technical analysts rarely focus on the Dow — with only 30 stocks, it’s too narrow to be of much use. And when they do, they focus on trends (the Barron’s article focuses on when long-term and short-term trends in the Dow clash) or levels of support and resistance.
But to dismiss Dow 10,000 outright is mistake, says Blaze Tankersley, senior managing director at BayCrest Partners, an independent brokerage. He notes that when the Dow has traded near 10,000, it’s stayed there for months, sometimes years. Starting in 1999, the Dow spent nearly three years stuck in a range with 10,000 as its base, before crashing through in 2001. On the way back up, it traded around 10,000 for around two years before trading up to 14,000.
“Anyone who thinks this is irrelevant is likely a fool,” says Tankersley. “[Dow 10,000] magnetizes prices towards it for many months if not years to come once [it’s breached].”
Now Is Not the Time for Caution
October 14th, 2009 | Posted by innovIn times of economic hardship, businesses are more tempted than ever to batten down the hatches. After all, management literature agrees: Transformative innovation involves taking a risk with absolutely no guarantee of a payoff. And who would want to get tangled up in that type of strategy just as a company’s core business is struggling? Surely only a crazy person.
Not so fast. As the saying goes, “When everyone zigs, zag.” And, as our two guest columnists argue in this BusinessWeek special report on Growth Through Innovation, a resilient approach to innovation, whatever the economic weather, is critical to building long-lasting businesses.
Mark W. Johnson, chairman and co-founder of Innosight, a consulting firm that specializes in disruptive innovation, argues that the apparent contradiction between sustaining an existing business and taking a chance on something new arises because it’s centered on the wrong question. “We’ve been paying too much attention to what companies do—and not enough to why they do it,” he argues in his illuminating column on the need for business-model innovation. “So as an antidote, let’s return to first principles and ask the most basic question: What made your company successful in the first place?” By reframing the question, new growth opportunities can become clear.
That’s how the San Diego Zoo & Wildlife Park faced up to trouble on the horizon, realizing that despite healthy revenue figures, its business model was unsustainable in the long term. By stepping back to reassess the organization’s position in the market, zoo executives identified various areas of opportunity. To date, two initiatives have been implemented successfully with 11 more in the pipeline, ready for successive rollouts.
Neither growth nor innovation has to spark a culture of chaos. As Roger Martin, dean of the Rotman School of Management in Toronto, explains through the early years of McDonald’s (MCD), growth can be systematized through a combination of analysis and intuition. Martin’s latest book, The Design of Business, from which this essay is excerpted, expounds his ideas on design thinking, a discipline gaining fans among executives looking to explore new markets and new ways of growing a business.
Also in this Special Report: case studies on two candy makers with very different approaches to growth and innovation. Upscale Belgian chocolatier Godiva recently introduced lower-priced bags of candies in supermarkets such as Publix and Safeway (SWY), with executives forecasting that the new lines will help double revenue by 2014. In contrast, the innovation cupboard at American candy giant Hershey has grown bare. In the mid-2000s, Hershey (HSY) regularly launched more than 200 products a year. Through the first three quarters of 2009, just 40 items have made their debuts. The message is stark. No innovation? No growth.
Finally, take a look at how innovation can spur growth on a global scale. On Sept. 21, President Barack Obama released his Administration’s Strategy for American Innovation: Driving Towards Sustainable Growth and Quality Jobs. The white paper outlined the “grand challenges of the 21st century,” broad issues affecting industries from health care to transportation. Taking our lead from the document, we outline 25 ways to rebuild America—and the companies that might make those ideas a reality.
October 14th, 2009 | Posted by innovThe McDonald brothers had opened their first restaurant in 1940. It attracted throngs of customers, with harried carhops serving up to 125 carloads at a time. Within the decade, though, Mac and Dick realized they had to revamp their restaurant or find a new line of work. Some of their best customers were families giving mom a night off from the kitchen. But now these families were driving right past, turned off by the loitering toughs that drive-ins attracted. Many of the remaining customers complained that the food got cold on the journey from kitchen to car.
So they cut the menu to only 25 items, and standardized the burgers. They replaced carhops with service windows. Productivity enhancers like five-at-a-time milk shake mixers enabled them to turn around food orders quickly.
It wasn’t long before the brothers had opened four additional outlets. They could have stopped there, but the man who sold the brothers those five-at-a-time milk shake makers was not about to. Ray Kroc imagined the scene repeated from coast to coast—and around the world. He relentlessly stripped away uncertainty, ambiguity, and judgment from the processes that emerged from the McDonald brothers’ original insight. And by fine-tuning the formula, Kroc powered McDonald’s (MCD) from a modestly prosperous chain of burger restaurants to a scale previously undreamed of.
The path taken by McDonald’s is not just a study in entrepreneurship. It’s a model for how businesses of all sorts can advance knowledge and capture value. The McDonald brothers and Ray Kroc took the same route followed by successful business innovators in every domain.
The model for value creation that Kroc followed, which can be replicated, requires a balance—or a reconciliation—between two prevailing points of view on business today.
One school of thought holds that the path to value creation lies in driving out the old-fashioned practice of gut feelings and instincts, replacing it with strategy based on rigorous, quantitative analysis (optimally backed by decision-support software). In this model, the basis of thought is analytical thinking, which harnesses two familiar forms of logic—deductive reasoning and inductive reasoning—to declare truths and certainties about the world. The goal of this model is mastery through rigorous, continuously repeated analytical processes. Judgment, bias, and variation are the enemies. If they are vanquished, the theory goes, great decisions will be made and great value will be created.
The opposing school of thought, which is in many ways a reaction to the rise of analytical management, is centered on the primacy of creativity and innovation. Analysis has driven out creativity and doomed organizations to boring stultification. To proponents of this philosophy, the creative instinct—the unanalyzed flash of insight—is venerated as the source of true innovation. At the heart of this school is intuitive thinking—the art of knowing without reasoning. This is the world of originality and invention.
These two models seem utterly incommensurable; an organization must choose to embrace either analysis or intuition as the primary driver of value creation. This choice then plays out in the structure and norms of the organization. Business organizations dominated by analytical thinking are built to operate as they always have. By sticking closely to the tried and true, organizations dominated by analytical thinking enjoy one very important advantage: they can build size and scale. In organizations dominated by intuitive thinking, innovation may come fast and furious, but growth and longevity represent tremendous challenges.
Intuition-biased firms cannot and will not systematize what they do, so they wax and wane with individual leaders.
Neither analysis nor intuition alone is enough. Rather than forcing a binary choice, the burden is to reconcile the two modes of thought. Aspects of both are necessary but not sufficient for optimal business performance. The most successful businesses in the years to come will balance analytical mastery and intuitive originality in a dynamic interplay that I call design thinking. Design thinking is the form of thought that enables forward movement of knowledge, and the firms that master it will gain a nearly inexhaustible, long-term business advantage.
Design-thinking firms stand apart in their willingness to engage in the task of continuously redesigning their business. They do so with an eye to creating advances in both innovation and efficiency—the combination that produces the most powerful competitive edge. This is not to suggest that only design-thinking firms pursue innovation. No, the value that business leaders place on innovation is reflected in the wealth of resources that they devote to its pursuit. But in all too many cases, businesses unwittingly work against their own purposes. Even as corporate leaders chase the vital, elusive spark of creativity, their organizations’ structures, processes, and norms extinguish it wherever it flares up. Their cultures and routines privilege analysis over intuition and mastery over originality.
Even organizations with a deeply ingrained bias toward analysis and mastery, however, can develop powerful capacities for innovation. With determined leadership, they can develop the skills, structures, and processes that generate value by driving valuable insights along the knowledge funnel.
The first stage of the funnel is the exploration of a mystery, which takes an infinite variety of forms. A research scientist might explore the mystery of a syndrome such as autism. A hospital administrator might ask what kind of space would improve the condition of cancer patients coping with chemotherapy. Or an ambitious salesman might ask how and what Americans would like to eat on the go.
The next stage of the funnel is a heuristic, a rule of thumb that helps narrow the field of inquiry and work the mystery down to a manageable size. The heuristic may be a genetic anomaly, a user-centered approach to the process flow of a chemotherapy patient, or the concept of a quick-service, drive-in restaurant. It is a way of thinking about the mystery that provides a simplified understanding of it and allows those with access to the heuristic to focus their efforts.
As an organization puts its heuristic into operation, studies it more, and thinks about it intensely, it can convert from a general rule of thumb to a fixed formula. That formula is an algorithm, the last of three stages of the knowledge funnel.
For Mac and Dick McDonald, their journey began with a question: What and how did the mobile, leisured, mass middle class of Southern California want to eat? The brothers devised an answer by focusing on a specific facet of that emerging culture—the consumers’ desired out-of-home eating experience. The heuristic they developed—a quick-service restaurant with strictly limited menu options—emerged when they narrowed the field of possibilities to a manageable set of salient features.
Kroc then picked up the baton, driving that understanding—that heuristic—all the way to an algorithm by continuing to cut away vast tracts of possibility. Hamburgers could be charbroiled or pressure-cooked. The menu could be broad or narrow. Restaurants could be smaller or larger. Ultimately, Kroc plucked one answer along innumerable dimensions to construct McDonald’s defining algorithm. Once that algorithm was in place, Kroc pushed it as far as it would go, adapting its elements to changing markets and economic conditions, but leaving its essential outlines unchanged.
The McDonald’s story illustrates important elements of the dynamics of the march of knowledge from mystery to heuristic to algorithm: the paring away of information. The gain in understanding comes from picking out salient features of the environment and out of them building a causal understanding of it: “I think that Californians would like a quick-service hamburger joint.” The heuristic doesn’t attempt an encyclopedic understanding of the new Californian beach culture and how the freeway system brought it into being.
By paring away possibilities from the mystery of what and how Californians want to eat to the limited menu, drive-through, quick-service burger joint, the McDonald brothers could focus on a few important things and replicate the model several times over, extending its success. When Kroc converted the heuristic into a precise algorithm, he was able to scale the chain.
McDonald’s created an efficiency advantage. By honing and refining the heuristic, it extended that efficiency advantage. By converting that heuristic to algorithm, Kroc drove the efficiency advantage still further ahead of his competitors, creating an enterprise worth tens of billions of dollars—all from one new-style burger joint.
Medicom Is Making It on Its Own
October 12th, 2009 | Posted by innovThe audio device is sleek and sophisticated looking, accented with shiny metallic details; its earphones have state-of-the-art sound quality, with the capability of reducing 85% of unwanted background noise. It’s what you’d expect from Danish electronics maker Bang & Olufsen (BOb.CO), known for its high-end, high-design stereo equipment. Only it isn’t an MP3 player—it’s a new stethoscope.
The Littmann E3100 and E3200 electronic stethoscopes, released by 3M (MMM) last April, were created by industrial designer Medicom, a 20-year-old outfit that was spun off from Bang & Olufsen two years ago.
Though Medicom is on its own, it retains the Bang & Olufsen touch as it helps design products for medical devices and pharmaceutical companies. Rather than keep designers on staff, for instance, Medicom contracts them to work on specific consulting projects, just as Bang & Olufsen does. On the 3M assignment, the designers were even welcome to use any of the acoustic, sound-sensor, and other engineering technology that Bang & Olufsen had developed for consumer speakers, headphones, or stereos.
Medicom has changed in other ways, however. Medicom Chief Executive Henrik Kagenow pared down the staff, retaining engineers and biochemists, but dismissing manual production workers. In essence, he has turned the company, based in Struer, Denmark, into an innovation and design consultancy that focuses on health-care devices for other companies, rather than a maker of these products. “The first chapter in Medicom’s history was to be a simple supplier with a production capacity,” says Kagenow. “So we decided to become a device manufacturer with design capabilities.”
The new emphasis makes Medicom more like IDEO, Continuum, or Smart Design—firms that also design medical devices for big clients. The big difference: Medicom has direct access to its former parent company’s renowned research, enabling it to move faster and incorporate high-end technology, such as Bluetooth capability, in the new Littmann stethoscopes. This means doctors can record and transmit heart beats directly into files for electronic medical records.
The stethoscopes also repurposed noise-reduction technology used in Bang & Olufsen’s headphones. And then there’s the physical design advantage—the Littmann stethoscopes look chic, not clinical. The tip used to listen to a patient’s chest, for instance, has elegant lines and simple buttons with graphic icons that help practitioners easily switch frequencies for more detailed listening of difficult-to-detect heart murmurs and abnormal lung sounds.
At the time of Medicom’s spinoff, Bang & Olufsen was struggling. While known for its beautiful products, from MP3 players and phones to stereo systems, sold at premium prices, its sales suffered as other design-conscious electronics makers, notably Apple, won over customers who wanted sexy-looking MP3 players and phones. In addition, new computers could house music collections, eliminating the need for complex and expensive stereo systems.
Apple’s prices were cheaper, too. A Bang & Olufsen Serene cell phone went on the market for a hefty $1,275 in 2007. Apple’s iPhone, which debuted the same year to widespread complaints of high prices, cost half that much. Bang & Olufsen needed to make some decisions to help its bottom line.
Medicom was then basically a large-scale manufacturing company within Bang & Olufsen, which the company’s leaders realized was not part of the core business of the overall corporation. “Think about it: Having a manual-production company in a country like Denmark doesn’t make much sense,” Kagenow says. “We couldn’t compete in manufacturing wages. We realized a company like ours needed to focus on innovation and concept development.”
Plus, Kagenow says, “we wanted structure, and we wanted focus. We wanted to create extraordinary design, to use the history of Bang & Olufsen. So we decided to become a B2B company.”
Besides stethoscopes for 3M, Medicom has created a blister-pack of pills for such drug companies as Bayer (BAYGn.DE) and Sweden’s Nycomed. The package is slightly curved, to fit more comfortably in a patient’s hand, and echoes the shape of Bang & Olufsen’s BeoCom cordless phones.
Medicom is developing a minimalist, slightly rectangular auto-injection device, which is meant as an alternative to scary-looking syringes, for an undisclosed partner. The company is also working on an egg-shaped drug inhaler for another undisclosed company. The device unfolds gracefully to reveal the inhalation pipe, but closes into a smooth, rounded object that could fit neatly and discreetly into a purse or briefcase.
On Oct. 8, Bang & Olufsen reported smaller-than-forecast losses for the first quarter of its 2010 fiscal year, suggesting the decision to set Medicom free might be paying off. Medicom seems better off as well. Kagenow won’t disclose any financial figures, but he says: “We are growing in terms of selling services in industrial design.”
Costco: Early Sign — or Exception?
October 7th, 2009 | Posted by stockPosted by: Ben Steverman on October 07, 2009
Costco Wholesale Corp. (COST) posted impressive results this morning. My question is what sales and profits at the warehouse retailer say about retail more broadly.
Costco posted earnings of 85 cents last quarter, beating Wall Street’s estimates of 7 cents.
“The company also reported sales and traffic growth for September, both of which accelerated from August,” writes Credit Suisse (CS) analyst Michael Exstein.
Traffic was up 4.5% from a year ago, while worldwide same-store sales rose 1%. (Though they were down 1% for the U.S. alone.)
On the news, Costco shares rose 1.85% on Oct. 7.
Investors are still skeptical about the outlook for consumer spending, and in that environment, Costco is beating (low) expectations. But can the rest of retail do the same?
Michael Yoshikami, president and chief investment strategist at YCMNET Advisors, thinks not. In an interview yesterday, he said Costco typified the kind of company that could perform well in this economic environment. He said:
[Costco] is a company that is going to do well in a slow-growth economy. [Discount retailers] like Costco, Wal-Mart (WMT) and Amazon (AMZN): These are companies that are going to gain share when consumers have less money to spend.
In an era of almost 10% unemployment and high consumer and business debt, Wal-Mart wins and Nordstrom (JWN) presumably loses. This is despite the fact that Wal-Mart shares are down 12% this year, while Nordstrom’s stock is up 143%. (Nordstrom was making up for a terrible 2007 and 2008 after all.)
But how long does this gloomy environment last? If the economy keeps improving, eventually that will benefit a broad range of retailers. The question is how long and how fast that general improvement can continue. And, as far as I can tell, economists are having a very tough time agreeing on an answer. What do you think?
Dean Kamen Reinvents Coke’s Soda Fountain
October 7th, 2009 | Posted by innovOn Sept. 29, Dean Kamen—the maverick inventor behind the Segway and the first wearable insulin pump for diabetics, and the multimillionaire founder of DEKA Research & Development—stood before a small audience at the AMC Parkway Pointe theater in Atlanta to speak publicly for the first time about a recent collaboration. And it was a surprising one: The man known for developing life-saving medical devices had teamed up with Coca-Cola (KO) on the beverage giant’s much-touted, next-generation soda fountain: the Freestyle.
Why was Kamen busying himself on a soft-drink dispenser? It brings to mind Steve Jobs’s reputed question to PepsiCo (PEP) then-president and future Apple (AAPL) CEO John Sculley: “Do you want to spend the rest of your life selling sugared water, or do you want a chance to change the world?” Kamen falls in the latter camp, but he says he saw in Coca-Cola, and in the innovative Freestyle project specifically, a way to advance two of his change-the-world projects.
One of these—a nonprofit named FIRST, which is aimed at encouraging kids’ interest in science and technology—actually forged the initial link, when Kamen asked Coca-Cola about becoming a FIRST sponsor six years ago. (That relationship continues—Coke was one of 14 sponsors of FIRST’s 2009 Robotics Competition in April, though neither party will reveal any dollar amounts.) That’s how Kamen got to know Nilang Patel, the head of Coca-Cola’s research lab.
In early 2005, Patel’s team started thinking about how to reinvent the company’s fountain business, which controlled 75% of the market but hadn’t changed much in decades. Knowing Kamen’s reputation as a clever inventor, Patel approached him. Kamen was happy to develop closer ties with a FIRST sponsor, and he saw Coke as a potential future partner in his plan to deliver potable water to kids in the developing world, his other world-changing project.
Kamen’s immediate assignment, though, was to help re-engineer the fountain. “Measuring fluids, mixing fluids, moving fluids—that’s what we do,” says Kamen, 58. “Coca-Cola is used to delivering liters, while I was used to working at 10 to the minus ninth”—or 1 billionth—”of a liter, but the problems that Nilang and I work on are similar.”
Patel and Kamen’s engineering teams put together a rough prototype in February 2005 and presented it to Coke’s business development team three months later. “We had seen a growing disconnect between our portfolio of brands and the eight choices we could offer at the fountain,” says Gene Farrell, who joined the Freestyle team in mid-2005 and now serves as vice-president of the jet innovation program at Coca-Cola North America. “[Then CEO Neville] Isdell immediately saw the opportunity to reinvent the fountain business and create a dynamic new consumer experience.”
Using technology adapted from systems that Kamen’s DEKA previously had developed to deliver small but steady doses of chemotherapy drugs, the Freestyle can combine tiny amounts of concentrated ingredients, stored in cartridges, with carbonated water and sweetener to mix a beverage on the spot. Each new machine gives customers a choice of up to 100 different soft drinks, from favorites such as Coke Classic to customized offerings like grape Fanta. That’s a 12 1/2-fold increase from the selections at most machines found in fast-food restaurants and movie theaters today.
From Coca-Cola’s perspective, the cartridge-based system, for which Coke holds 30 patents, offers several advantages over conventional fountains, which mix pre-made syrup with carbonated water. For instance, the syrup is stored in five-gallon bags that are more expensive to ship and bulky to store.
Whether it’s the greater number of choices, the possibility to customize, taste—Farrell insists that these “freshly made” sodas taste better than syrup-based versions—or sheer novelty, retailers testing the Freestyle have reported double-digit increases in beverage sales.
Another advantage: The digital fountains uses wireless communication to constantly report business data back to Coca-Cola headquarters, where marketers can view sales by brand, location, and section of the day. “It’s a tremendous new tool for understanding how customers consume our products,” says Farrell. He could know, for instance, that while Caffeine-Free Diet Coke ranked a ho-hum 12th in overall sales at a fast-casual burrito joint in Los Angeles, it was the No. 3 afternoon drink.
The platform also allows Coca-Cola to quickly test or roll out new products. “UPS a cartridge to a [retail] customer, download some software to the machine, and within days we could have data on how and where it’s selling,” says Farrell.
You won’t find the Freestyle in every McDonald’s anytime soon, but Farrell sees the new fountain as “the biggest single innovation initiative” in the company’s history, not least because Coca-Cola owns most of the technology. “We share some patents with our partners and a couple are licensed from Dean, but most we own outright,” he says.
Kamen was paid an undisclosed fee, and he may have strengthened Coke’s commitment to FIRST. But most important to Kamen is leveraging Coca-Cola’s global beverage distribution system for his dream of—”figuring out how to get clean water to every kid in the world,” he says.
For years, DEKA has been working on an innovative water-purification machine. And for years, Kamen has been talking about it to people at the United Nations and various non-governmental organizations. “But we realized the NGOs aren’t the ones who can help us get the machine into production, scale it up, bring down the cost curve,” says Kamen. Which is where the biggest beverage maker on the planet comes in.
The clean-water technology hasn’t been integrated into the beta version of Freestyle and might never be. “That’s still one of Dean’s dreams,” says Coca-Cola spokesman Ray Crockett.
But Kamen’s fantasy does align with the company in one way: Coca-Cola’s business depends on clean water—the single biggest ingredient in the company’s products. “We think there is vast opportunity to improve the quality of water around the world and even in the U.S.,” says Farrell.
Typical U.S. Worker Saw 401(k) Lose 24.3% in 2008
October 6th, 2009 | Posted by stockPosted by: Lauren Young on October 06, 2009
Maybe it wasn’t so bad after all.
U.S. workers suffered a 24.3% average loss in their 401(k) accounts in 2008, according to a new study from the Employee Benefits Research Institute and the Investment Company Institute. By contrast, the S&P 500 fell 37% while the Barclays Capital U.S. Aggregate Bond Index rose 5.2%.
The average 401(k) account balance was $86,513 at year-end 2008. (At the end of 2007, the average investor had an account balance of $114,337.)
Where did investors stash their cash last year? At year-end, the typical 401(k) investor had 56% of their assets invested in equities via funds and company stock versus a 41% stake in fixed-income securities such as stable value, bond and money market funds. By contrast, that equity stake exceeded 59% in 2007. The market’s mayhem helped drive stock positions down, obviously. “Investment performance likely explains much of the changes in 401(k) participants’ asset allocations over time,” the report says.
This is the most alarming detail of all: While the 72% of workers held 20% or less of their account balances in company stock, nearly 7% of 401(k) investors had more than 80% of their account balance invested in company stock.
Whoa. That takes the risk premium to the extreme.
October 6th, 2009 | Posted by innovWe recently got a call from a friend who happens to be the CEO of a Fortune 1000 company. She told us she was leaving to go to a much smaller firm. She had nothing but positive things to say about her current job, but something about this new opportunity was more inspiring to her. We were not surprised. We’d seen this type of behavior before. She is an Alpha, an A-player who drives meaningful change.
So is the seasoned veteran who just joined our firm. His most recent title was “executive creative director” at a global creative firm. We were happy but not surprised to have attracted this talented individual. Like many superior performers we all know, he chose a smaller firm despite being pursued by a host of larger firms with deeper pockets.
Why did we expect him ultimately to work on our team? Because of the environment we created. That may sound like bragging, but it isn’t. Much of what we’ve read and certainly everything we have experienced running our firm tells us that the keys to attracting and retaining the best employees—the Alphas—are working on something 1) meaningful, 2) in a lower stress environment, and 3) with a reward system that makes sense.
These three criteria for Alpha attraction and retention are quite obviously linked through innovation. This applies at your firm, as well. Stop and think about the last truly great person who left your organization. First think about what made that employee great. We bet you name such characteristics as action-oriented, driven, passionate, fun, and genuine.
Now think about where that worker went. Chances are, to a position with a perceived promise of putting his or her talents to better use—moving into a role with greater challenges and opportunities to learn and make a difference. It wasn’t about money. Sure, the new employer may have given a pay hike, but that was likely more about the individual’s track record than his or her focus on salary and benefits. Money follows these types of people because they follow the challenges. They find them and master both problems and opportunities and get well paid for doing so.
So being innovation-focused naturally attracts Alphas, and this in turn drives a better culture. Here’s why: Successful innovation is intrinsically meaningful. Said differently, you have to be solving a significant need in order to have success with a new product or service The best and happiest employees want to work on something meaningful. So they naturally gravitate toward innovation assignments.
It is not only more fun but also has a greater potential for personal payoff. Innovation is typically on the radar of the CEO. If you want to be in the spotlight, take on a major innovation initiative. It will bring out the best in you as an employee and get you immediately rewarded for performance.
Back to that Alpha who left your team. In hindsight, what would you have done to keep her happy? Chances are you would eagerly put her on your most heady, rewarding challenge. Think about what would happen if you had a project like that for every Alpha in the organization. The result would be a magnetic culture that attracts and retains the best people. It would be the Alpha Effect. Instead, too often we ask our best people to handle our most difficult clients or profitable but uninspiring projects. That leads to an unfortunate exodus of talented people.
You can smell a culture. Walk into any office and in seconds you will know whether something fun or insidious is cooking. That’s why I am always thrilled when people say “this feels like a really cool place to work” within the first few minutes of a tour. (The fact that they are taking the tour on a Segway might have something to do with it.)
I am happy not just because they are right but also because it is on purpose. We hire wonderful people (people full of wonder) and let them work on world-changing projects. We let them change the rules. In fact, our clients encourage them to change the rules.
Respect, humility, challenge, and talent are all key ingredients in the innovation stew. It not only smells good but also tastes great.
When we welcomed our new creative thinker, we were pleased to hear him say: “Something about the place just feels right to me. I think I can really make a difference here.” We’re committed to making sure he is correct.
Furnace buyers hope for tax credit
October 5th, 2009 | Posted by tax“If you are fairly low income, you may get zero out of the government on this because you have zero tax liability,” he said.
He recommended not only having a contractor provide a certificate proving compliance with the rules of the tax credit, but also discussing the matter with an accountant to make sure.
“We’re just telling people to be extra careful,” he said, noting that claiming a non-compliant, though newly purchased, furnace on one’s taxes could cause problems with the Internal Revenue Service in the future — especially without the proper documentation.
Black said his company will even offer an opinion of compliance and certificate for furnaces installed by other contractors.
“I don’t know if (the tax credit) has done anything to increase business,” said Stan Grubb, owner of Grubb Electrical, “but it has increased the sale of the higher-efficiency equipment.”
Grubb agreed with the other heating contractors that customers should request a certificate for qualification, and that contacting an accountant is also a good idea.
He and Black said they also have seen an up-tick in requests for geo-thermal heating systems, which carry a similar 30 percent tax credit with no limit on total project cost. The credit is retroactive for units installed before the federal program was created.
Geo-thermal uses the constant temperature found underground and less electricity than conventional, above-ground systems — but they cost far more to build.
“I’ve got one customer who is getting a $7,000 tax credit,” Grubb said.
“It’s starting to make sense for a lot of people,” Black said. “They’ve worked it where, with the tax credit, now it’s starting to make financial sense. There’s definitely a push.”
Even those who haven’t taken advantage of the high-efficiency furnace program can breathe a sigh of relief after Ameren announced last week natural gas prices had taken a 30 percent tumble over last winter amid world market volatility.
The company also offers a program with rebates of up to $370 for air sealing, $580 for attic insulation, $660 for wall insulation and $150 for duct insulation, as well as alternate payment and billing methods.
FYI
For more information, go to http://www.actonenergy.com or call (866) 838-6918
Locally, heating assistance may be obtained through the East Central Illinois Community Action Agency at 443-2705 or CRIS Senior Services at 443-2999.
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Apple iPhone: Can it Leap from Consumer to Corporate?
October 2nd, 2009 | Posted by stockPosted by: Lauren Young on October 02, 2009
Will Corporate America take the next big bite into Apple’s (AAPL) iPhone?
Maynard Um, a UBS tech analyst, upgraded Apple from neutral to buy on Oct. 2. Um’s new price target is $265, up from $170. His reasons include the stickiness of the Apple store along with new strategic partnerships.
But what caught my eye is this interesting point: the iPhone is gaining traction in the corporate world with 19 of the biggest 100 companies using iPhones. Um does not think iPhones will displace Research in Motion’s (RIMM) ubiquitous BlackBerry, “but, rather, believe it is likely at the expense of other Microsoft Exchange capable smartphones,” he says.
In order for Apple to gain greater traction in the enterprise market, in our opinion, the company must overcome some issues including providing 24×7 customer support, providing more future product roadmap details (to allow large enterprises to build ahead and prepare), provide alternatives to OS upgrades solely from iTunes desktop application.
What do you think? Can the iPhone make the transition from consumers to corporations? If so (or not), what does it mean for Apple?
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