Tuesday, September 27, 2005

Book Signing - Open Book Greenville - October 6th

I am having a book signing for Swamp Fox Insights; Innovation and Entrepreneurship in a Time of Profound Change at the Open Book in Greenville on Thursday, October 6, 2005 from 5:00 pm to 7:00 pm.

Here's the details, and here's a map to the Open Book

Please tell your friends, and if you are in town come join us.

Hopefully I won't be alone.

Very Interesting Report - The Innovation-Entrepreneurship NEXUS

OK. I know. Not everyone is a junkie like I am for a research report from the SBA Office of Advocacy entitled, "The Innovation-Entrepreneurship NEXUS: A National Assessment of Entrepreneurship and Regional Economic Growth and Development."

But every now and then you come across something like this that resonates because it precisely matches up with your experience. Here's the Cliff Notes version:

1) "When compared to local-serving industries, traded industries are generally larger, grow faster, and pay higher wages... In regions with higher levels of entrepreneurship activity the percent of all industries that are traded is significantly higher than in those regions with lower levels of entrepreneurship."

Note: SC is #1 in the continental US in foreign direct investment.

2) "The most entrepreneurial regions in the United States also possess the greatest innovation capacity." The author's Regional Innovation Capacity Index is made up of total R&D expenditures, the number of patents issued, and regional technology orientation.

Note: We can leverage our historical successes in industrial recruitment, the deep base of international companies with a presence here, to increase our innovation capacity. We don't have to convince BMW and other global companies to do research. We only have to convince them to do research here.

3) "The Regional Entrepreneurship Index was computed as the average of the relative rankings (equally weighted) of three core metrics: 1) the number of new firm births per 1,000 labor force, 2) growth in the number of new firm births and 3) the proportion of young firms that are growing." The author's Regional Entrepreneurship Index is a measure the capability of converting innovation capacity into entrepreneurial activity.

Note: We need a lot of work in this area. FastTrac in the Lowcountry, in the Midlands, Upstate, is a start.

4) "Innovation and entrepreneurship are both positive and statistically significant factors in regional employment change... entrepreneurship appears to mediate between innovation and regional employment."

Note: Thus the reason InnoVenture has major companies, universities, and emerging companies in the same room. Major companies and universities drive innovation, and the emerging, high-impact companies will spin out. That is the Austin model George Kozmetsky gave me in 2001.

This should be the foundation of the economic development strategy in our region.

Very Cool Kids - Southside High School Robotics

I attended a reception this evening for the InnoVision Technology Awards finalists.

As normal, InnoVision has identified a very impressive group of organizations enhancing the level of innovation in the region.

And then there were the students. Two members of the Southside High School Robotics Team were at the reception. Their project was a stair climbing robot which could carry firefighting gear up stairs and injured people down. It's good enough that now they are working on commercializing it.

Wow! Very very cool. The kids that is.

The director of a corporate research facility was so impressed he offered them each $70,000 jobs on the spot.

He was just kidding ... I think.

The Liberty Experience

Somewhere over the past few years we collectively reached a tipping point. A consensus formed that we needed to do some things different to move the community forward. Many people have stepped up and taken the initiative to put a building block in place.

One of those is Hayne Hipp, who created the Liberty Fellowship program to develop a cadre of leadership in South Carolina. Each class is a two year program, completely underwritten by Hayne. I'm fortunate to be in the first class, and it is hard to overstate what an incredible experience it has been. The first class has been so successful in Hayne's view, that he accelerated the selection of a second class by a year.

Each class member is mentored by a senior business leader in the state.The program is governed by a strong Board of Directors. Jennie Johnson is the Executive Director of the program. The level of experience and talent that Hayne and Jennie have assembled is impressive.

The core of the fellowship is four seminars over two years, exploring leadership through readings of great authors through the centuries. The first seminar was at Wofford last fall, and the second was at the Aspen Institute in the Spring. Each seminar in South Carolina is moderated by three deep and experienced individuals, Skip Battle, Bernie Dunlop, and Jennie.

Last spring, I shared thoughts from the seminar I attended at the Aspen Institute.
Notes from Aspen: The Fault Line of Faith
Notes from Aspen: The Fault Line of Identity
Notes from Aspen: The Fault Line of Freedom

Notes from Aspen - The One who endowed us with Liberty
Notes from Aspen - Carriers of culture
Notes from Aspen - Humans are social beings

I'll share additional thoughts from this week's seminar when I get back.

If you see Hayne or Jennie or Bernie around, thank them for me.

Sunday, September 25, 2005

Where to clusters come from?

Developing industry clusters makes sense as an economic development strategy. As a cluster develops and grows, it can support larger, more specialized firms, whose productivity increases because they focus narrowly on specific activities firms in the cluster need to be successful. The cluster itself enhances the overall productivity, and thus the global competitiveness, of each firm in it.

Where do clusters come from?

Governor Sanford recently said, "South Carolina must concentrate on its core industries — retirement, tourism and ports — for the state to compete in the global marketplace."

Michael Porter studied South Carolina and found four clusters: automotive, textiles, chemicals, and tourism. The SC Council on Competitiveness, set up at Dr. Porter's recommendation, has a "cluster activation committee."

I was in a meeting this week where someone very active in economic development said that, “We can't do anything to create a cluster, we can only support those created by the market.” I think that's right.

I chaired the economy committee of Greenville Vision 2025, and was uncomfortable stating that we would have this or that cluster, without knowing who the champion was that was going to get each cluster organized.

Peter Drucker has said, "Markets are not created by God, nature, or cosmic forces, but by businessmen." Replace "Markets" with "Clusters," and he's still right.

The key to successfully developing clusters is not having a central planned committee identify and develop them. Central planning as an economic development strategy never works. The key to developing clusters is identifying and supporting the entrepreneurial champions who will work tirelessly to create them.

An entrepreneurial cluster champion: Jack Stone

Jack Stone is a great example of an entrepreneurial cluster champion. He tirelessly crosses the state with a missionary's zeal convincing apparel companies that it is their self-interest to collaborate more closely and outside organizations that it is in their self-interest to assist in developing an apparel cluster.

When experts or central committees examine the state and think about what we ought to focus on in the future, no one put apparels on their list. In fact, most list apparels as an example of the type of industry that we'll need to let go of as we make the transition to a more innovative economy.

None of that makes any difference, because Jack believes and is willing to work hard to build a strong and vibrant apparel cluster that can "identify strengths and opportunities still existing in South Carolina apparel companies, collaborate by working together to implement advanced marketing and supply chain technologies, and focus on marketing to the end consumer."

Jack is focusing on apparel, and not some other sector that "experts" might think more appropriate, because it is in his self-interest to. He owns an apparel company and has for most of his life.

Adam Smith noted that, "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest."

That's why entrepreneurial cluster champions do what they do too.

Clusters are big and small business

"Speaking earlier Friday morning to more than 300 members and guests of the Forum Club at Sun City Hilton Head, [Governor] Sanford said that after years of reliance on big business, such as textiles and other manufacturing, South Carolina is now a small-business state."

Well. How about South Carolina is a big business and a small business state?

Clusters make both small and big companies more globally competitive.

BMW gets it!

It's not either/or - small business versus big business - it's both.

Clusters in a culture of poverty

I was struck this morning by an AP story, Rita’s victims differ from Katrina’s.

I remember scenes of people in New Orleans after the hurricane wagging their finger into the camera and saying, "Where are you? You have got to come get us."

Which was true, but it begged the question why there were so many people in need of being gotten in the first place. Bottom line is that there was a culture of poverty in New Orleans so insidious that large numbers of people there either could not or would not get out of the way of a hurricane.

As if this needed to be highlighted, television news reports showed very few victims of Rita in need of immediate rescue. Surely some of this was because "a new sense of urgency following Katrina led to a more thorough evacuation." But probably a much larger impact was because, "most of Rita's victims ... are less likely to live in poverty, more likely to own a car, and less likely to be a member of a minority."

At home, we feel a sense of urgency to increase our knowledge base in order to create a more innovative and productive economy. We have our own challenges here with people that live in a culture of poverty.

How do we increase the knowledge base of a community of people that will not or can not get out of the way of a hurricane? That challenge seems as overwhelming as a hurricane itself.

Sunday, September 18, 2005

Research Week I: Clemson University Restoration Institute

The Clemson University Restoration Institute (CURI) will be a major new research campus 82 acres of land and associated improvements, valued at $14.5 million, contributed by the City of North Charleston. $10.3 million of funding was also received for this project South Carolina Research University Infrastructure Bond Act.

The vision of the CURI is to provide sustainable and cost effective solutions to the ecological and built infrastructure restoration challenges facing industries, professions, and communities throughout the state, nation, and world.

A major center piece of the campus will be the restoration of the War Between The State era submarine, the CSS Hunley.

Charleston is the perfect place to a globally competitive cluster around restoration technologies and innovations.

Research Week II: Innovista at the University of SC

The University of South Carolina has announced Innovista, a mammoth new project spreading out over 200 acres and combining 5 million square feet of research labs, office space, mixed-use retail and affordable residential housing in Columbia. The project is a unique new "innovation district," whose "vision is urban—with faculty and private researchers and their families living next to, or over, where they work. And only a short walk or bike ride from parks, restaurants, entertainment, shopping, schools, and recreation."

"A major Innovista element is the focus on research aimed at the emerging technologies and intellectual clusters—Biomedical, Environmental, Nanotechnology, and Future Fuels—that companies will find extremely valuable in the global economy."

The ambition of Innovista is that for "the next 100 years as it creates a magnet for attracting the world’s brightest minds and most innovative companies to South Carolina."

Research Week III: Greenville Hospital

Greenville Hospital System will build a health sciences institute to help take research innovations from the lab to the marketplace. GHS is providing 22 acres for the $20 million, 100,000-square-foot facility.

Clemson pledged $7 million while USC committed $2.5 million toward that project. Another $2.5 million pledged by MUSC for the project is forthcoming. Greenville Hospital System has pledged $9 million for two buildings at its Patewood and main campuses.

The institute is part of Health Sciences South Carolina, a collaborative including GHS, Palmetto Health, and the Spartanburg Regional Healthcare System, along with the Medical University of South Carolina, the University of South Carolina, and Clemson University. The obective of the collaborative is to drive economic growth by fostering research the partners hope will attract biotechnology companies and promote development of better-paying jobs. There has been over $80 million investment by partners in healthsciences research.

Research Week IV: Advanced Materials

Across the state, there were annoucements this week of initiatives in advanced materials research.

The University of South Carolina NanoCenter, a 90,000-square-foot, public-private complex has a total of $35 million in investments. $10.8 million from the State of South Carolina was announced this week, to compliment $17.5 million of private investment by developer Craig Davis. The USC NanoCenter is the University’s focal point for science and engineering studies of nanometer-scale structures, their unique properties, and their integration into functional units.

Clemson announced a $5 million investment by the State of South Carolina in Innovation Center at the Clemson Research Park. The 40,000-square-foot building will house small, young high-technology companies that focus on photonics (electromagnetic energy), nanotechnology (atom-sized technology) and biomaterials. The building will be a neighbor to the Advanced Materials Research Lab, whose major occupant of the Clemson Advanced Materials Research Lab, is the Center for Optical Materials Science and Engineering Technologies.

COMSET is a partner in the Carolinas MicroOptic Triangle, which published it first newsletter this week, and will be featured at the Zoom Zone Showcase for the Advanced Materials and Manufacturing industry on October 13-14 at the Civic Center of Anderson.

Sunday, September 11, 2005

What's the visceral essence of the movement we are experiencing?

There was a discussion at the SC Council on Competitiveness Friday that we need to capture the visceral essence of the movement that is afoot - that emotional, top-of-mind thing people are yearning for.

How about you? You are investing time seeking something. You are taking time to read this. What's the visceral essence of what you are after?

Quick, right now while it is fresh on your mind, leave a comment listing the top two or three words that popped into your mind when you read that question.

Suck and Blow versus The Swamp Fox Model of High-Impact Companies

Two Greenville entrepreneurs, Doug Hamer and Brian Higgins, created an extreme product - a gelatin bar drink called Suck & Blow, which is featured as the cover story in the business section of Sunday's Greenville News. They have created a high-impact company to move from "early stages of the rollout... [where they] are currently selling their product in South Carolina, Tennessee, Massachusetts and Nevada ... to distributing shortly in other states and internationally in Canada, Mexico and Asia."

In Swamp Fox Insights, I describe a systematic, risk managed process for commercializing innovations. Does Hamer's and Higgins' experience match the Swamp Fox Model?

Visualize A Significant Opportunity: "Inspiration does not magically appear out of the ether of the universe but comes from very human leaders."
Doug Hamer was spending a July afternoon on Port Royal Sound near Beaufort in 2001 [and] ... having a grand time when he simultaneously spied a woman slurping a Jell-O shooter from a plastic cup and a guy doing the old frat-house rendition of "funneling" a beer from a long plastic tube." I immediately thought it would be really neat to put the two ideas together," Hamer recalled.
Assemble Outstanding Leadership: "Serial entrepreneurship is one of the most important elements of a highly innovative culture."
Hamer's first job was delivering the old Greenville Piedmont in his neighborhood near Greenville Country Club when he was 11... He learned from two of Greenville's best-known entrepreneurs Charlie Houser and Leighton Cubbage as an employee of Corporate Telemanagement Group, a long distance company that was sold to LCI International in 1995.
Articulate A Compelling Strategy: "Most successful high-growth companies are built not by introducing radical technical innovations but by using existing components and technologies to create products that precisely meet the evolving needs of a new and emerging base of customers. "
First came the experiments with ingredients and the delivery system. They would buy tubing from Lowe's and mix their gelatin cocktail using Kraft's Extreme Jell-O, vodka and water. "We had to experiment to get the texture just exactly right," Hamer said...

Locally, Suck & Blow is carried by many of the liquor and party stores and is sold at numerous bars, including Wild Wing Cafe in downtown Greenville. "We like it because it goes along with our party atmosphere," said Josh Pair, a manager at Wild Wing. "Wild Wing has a menu that is based on sharing, and these things fit right in. Plus, they're good sellers. Once you see one go out, it's not long before another 10 go out."
Execute A Focused Plan:"Commercializing disruptive innovations is inheriently a learning process, and the most successful strategies usually identify incremental milestones, attract resources necessary to achieve those milestones, and then adjust based on what is learned about the developing market."
They would make upwards of 250 tubes of the concoction and take it with them on trips to the beach, tailgating parties and the like. After a Fourth of July party in 2003, they decided it was time to go into business. "We had made 500 of them for the party, and people went straight through them," Higgins said. "We figured it was time to start selling them."

To make the leap from party curiosities to a marketable product took several steps. First, they would need a way to manufacture the tubes. They would also need a recipe that would be approved by the Bureau of Alcohol, Tobacco and Firearms and the Tobacco Trade Bureau, a bottling company and a distribution network.

And there was another crucial component: money. Neither Hamer nor Higgins had much of that, and they made what would prove to be a tough decision. Rather than seek out investors with deep pockets who might want to control their destiny, they financed SAB Enterprises on small investments and loans from friends and family and on their own credit cards. It was a model that has led to sleepless nights, many highs and lows, but it has also kept them firmly in charge.

They took Suck & Blow to the Night Club & Bar Show in Las Vegas in March 2004 and were voted one of the top five booths among 2,000 vendors. "We left that show as high as we could be. We knew we had a hit." Hamer said.
The acid test of any model is can it be used to accurately predict reality. The experience of Harner and Higgins in commercializing Suck and Blow matches up pretty well with The Swamp Fox Model's description of how successful high-impact companies are actually created.

Swamp Fox Insights: Innovation and Entrepreneurship in a Time of Profound Change at Amazon.com

Regionalism and the Southeastern Innovation Corridor

At the end of InnoVenture 2004, one of the venture capitalists attending gave us an "A" for energy, enthusiasm, and collaboration, but a charitable "D" for the quality of the companies seeking venture capital. She said she was looking for "a pipeline of emerging companies with game changing innovations."

To do that we needed to target a region with a critical mass of innovation and talent. For InnoVenture 2005, we defined to target geography as the Southeastern Innovation Corridor - from Birmingham to Research Triangle Park and from Oak Ridge to Charleston. In this region are 2 national labs, 16 research universities, and 23 million people. The critical mass of innovation and talent in this region is competitive on a global basis.

Too often we force economic development into political boundaries that don't match up with our natural business relationships. The politics ought to follow the market, not the other way around.

I was struck recently when I read a invitation from the Piedmont Triad Entrepreneurial Network inviting people to attend a regional meeting.
There is a very good chance your most profitable prospect may be headquartered in Hickory.

The maverick you need for the new marketing push is based in Matthews.

The winning technology you need to license is in Wilmington.

The strategic partner you need to turbocharge growth is already aggressively attacking your niche from Apex.

But you will never know if you restrict yourself regionally?

The Piedmont Triad Entrepreneurial Network is on the right track.

Saturday, September 10, 2005

InnoVenture recognized by Innovision Awards

Several years ago, Deloitte provided the leadership to create the InnoVision Awards program "promoting technology-based solutions and businesses, highlighting and encouraging innovation, and recognizing those who excel at it." From the beginning, the Innovision Awards has been a first class event, with a strong advisory board of technology leaders in the Upstate.

InnoVenture is extremely pleased that this year we have been named as a finalist in the Community Service Award category.

Sunday, September 04, 2005

Enlightened Leadership

Many vicissitudes are creating turbulence in our society.

We are making progress in improving education, but the rest of the world is accelerating so fast that that the gap between where we are and where we need to be to remain globally competitive is growing.

Parts of our economy are being dislocated as the global winds blow, and individuals' lives are being impacted in painful ways. Some South Carolina manufacturers can not figure out how to be profitable with South Carolina workers, but the Chinese are building research and development facilities in Camden.

Among the devastation wrought by Katrina is the ripping open of the wound of race in this country.

Brad Warthen, the Editorial Page Editor of The State, and I had an email discussion about education and agreed that we need enlightened leadership to guide us through the vicissitudes of education. It's also true for economic, and racial and other vicissitudes we face.

The challenge of our society is to find that enlightened leadership, and then to rally around and support them. In the highly polarized world we live in, that is a very tall order.

Vicissitudes: Education

"SAT scores show state should stay the course"

This is the headline of a Sunday editorial by Inez Tenenbaum in the Greenville News making the point that SAT scores have improved significantly in recent years. If gauged by a measure she believes is more accurate, the National Assessment of Educational Progress:
South Carolina has made a tremendous investment in high standards and accountability, in financial and human terms. Our system is respected around the nation as one of the toughest and most rigorous. Most important of all, it is working -- by virtually any standard and virtually any measure.
In another article titled "America must produce more new engineers" that appeared in the Courier Post Online last Sunday, Frank Radcioppi observes:
According to the federal Bureau of Labor Statistics, there are now more graduates of fast-food management universities than there are engineers in the United States... A study of math and science skills by the Organization for Economic Cooperation and Development found that U.S. students ranked 24th out of the 29 countries evaluated. More disturbing is that 38 percent of all engineers with doctorates in the United States are immigrants.
Incremental improvements in the way we educate are children are fine and good. It's better than going the other direction.

But we are facing down the barrel of a long-term crisis greater than 9-11 or Katrina. We are at risk of losing our competitive advantage globally. We need a Manhattan Project or a Man To the Moon commitment to radically overhaul our system of education, and we need it today.

Unfortunately this crisis is not occurring in the midst of a world war or the launching of Sputnik. It is a slow burn. Will we react before it is too late?

Vicissitudes: Economy

A headline in The State screams "Foreign competition [is] taking jobs from S.C."
Federal data analyzed by The State newspaper [shows] more than 53,000 South Carolina workers at 423 sites lost their jobs since 1994 because:

• The employers moved their jobs to countries where people work for less money.

• Cheaper imports cut the demand for the goods made in South Carolina.
Recognizing that a lack of productivity is at the heart of the problem, Linda Floyd, a program coordinator with the S.C. Employment Security Commission, said
It is hard to motivate middle-age people to go back to school. They’re often intimidated by the idea of college, especially after spending 20 years in a factory... You’re 42-years-old and you’ve got about 20 more years in the work force. How do you want to spend it? Being a cashier at Wal-Mart is fine if that’s what you want to do for the next 20 years.
Lewis Gossett, president of the S.C. Manufacturers Alliance (and perhaps the organization that wanted this in the paper), says "By and large, the quality of the jobs being lost is not being replaced."

But is it not South Carolina workers who are solely to blame. The Charlotte Observer notes that of all people, "China-based Haier adds workers, goes for bigger U.S. profits."
As the Carolinas have mourned the loss of traditional manufacturing jobs to China, Haier represented the flip side when it opened a $40 million, 350,000-square-foot Camden plant with 27 workers in 2000. It now employs 225 in this city about 110 miles south of Charlotte.

Over the next six months, the company plans to set up the research and design center on its 110 acres on a former hay field. Haier will service its U.S.-made refrigerators and send ideas about American tastes back to China for the development of other products.
So here we are. South Carolina manufacturers are bemoaning the fact that "foreign competition [is] taking jobs from S.C." while the Chinese are adding jobs and investing in research and development in Camden.

Some South Carolina manufacturers can not figure out how to be profitable with South Carolina workers, but Chinese manufacturers can. Is that a wake up call or what?

Saturday, September 03, 2005

Vicissitudes: Race

Among other devastation, Katrina has ripped open the very deep fault line of race in this country. It's difficult to build communities of innovation or anything else when we have such different prisms through which we interpret the world around us.

Some see racism in the response to Katrina

Rev. Al Sharpton - "If we were not dealing with black people and poor people, we would not be dealing with this snail's pace reaction."

U.S. Rep. John Lewis (D-Ga.), (Congressional Black Caucus member) - "People see class, and they also see race. [The conditions in New Orleans] just tended to dramatize the plight of a segment of the population that has been left out and behind."

Jessie Jackson - "Today, as the President comes to Louisiana, Alabama and Mississippi for his ceremonial trip to look at the victims of the devastation, he would do well to have a plan more significant than a ceremonial tour... His whole response is unacceptable. How can blacks be locked out of the leadership (of the relief), and trapped in the suffering? It is that lack of sensitivity and compassion that represents a kind of incompetence."

Kanye West (black rapper) - "I hate the way they portray us in the media. If you see a black family, it says they're looting. See a white family, it says they're looking for food... They've given them permission to go down and shoot us... George Bush doesn't care about black people."

David Billings (of the People's Institute, a 25-year-old New Orleans organization focused on ending racism) - "I do think the nation would be responding differently if they were white elderly and white babies actually dying on the street."

Yvette Brown (African-American evacuee from New Orleans) - "You want to know why all those black people are stuck down there dying? If they were white, they'd be gone. They'd be sending in an army of helicopters, jets and boats."

But others see it differently

U.S. Rep. Stephanie Tubbs Jones, D-Ohio
- "The issue is not about race right now. There will be another time to have issues about color."

Secretary of State Condoleezza Rice - "That Americans would somehow, in a color-affected way, decide who to help and who not to help—I just don't believe it... [I will tour the devastated area on Sunday] "for a president who cares deeply about what is going on in the Gulf region but can't be everywhere... I think everybody's very emotional. It's hard to watch pictures of any American going through this. And yes, the African-American community has obviously been very heavily affected."

Edith Thibodeaux (African-American evacuee from New Orleans) - "I don't think it was racist. They were just trying to save the area for the tourists. It's about how much money they can make in this city. They don't care about us."