Kim Palmer

Monday, 31 March 2003 08:37

Learning the lingo

Implementing lean manufacturing has been and can be a time-consuming and costly endeavour. Like any business process system, there is a complete set of concepts and corresponding terminology that accompanies the implementation.

However whether or not you and your employees know that Seiri means to throw away rubbish in Japanese or Takt is German for pace, is not the issue according to Rebecca Morgan, president of Fulcrum Consulting Works Inc.

“There is terminology in lean manufacturing and it is nice to use it if you can … but really you should teach them concepts, you don’t force them to learn Japanese phrases.”

Morgan was called in to help the Neighborhood Manufacturing Co., a small plumbing hand-tool manufacturer in the inner city, increase productivity and safety and decrease inventory and shipping time.

“At Neighborhood Manufacturing we took an incredibly informal approach,” explains Morgan. “We didn’t have the time and resources, there are only 25 or so employees and the supervisors are all working supervisors.”

Morgan came in to help Neighborhood move toward better efficiency and better safety, “In many situations owners will say, ‘I want to go lean, that is the decision and now we are going to execute it,’” says Morgan. “But what he wanted was just for the problems to go away.”

One of the first concepts Morgan wanted to implement was the 5-S. “There are five Japanese words that begin with S that mean neat, clean and orderly.”

But instead of going through each individual concept with all of the employees, management found an employee to head up the cleaning process, “There was a guy who worked there named Louie and he was a neat kind of guy, so we knew he would do a good job and it would appeal to him emotionally.”

After the cleanup and more room was cleared of inventory, Morgan found another employee to head-up cell design. “I gave her literally 10 minutes of cell design training … I explained what a cell was and that it should be U shaped if possible and that no product should travel backwards, and we needed very little room for inventory.”

Cell design can be quite entailed but in this case the idea was to create four cells that worked efficiently. “You don’t have to use big CAD software,” says Morgan. “She used cutouts and grid paper.”

In the end productivity was increased 12 to 15 percent, normal numbers for lean, and Neighborhood can now focus on more contract manufacturing. The key in this case was simplicity says Morgan, “Don’t focus on the perfection of it,” says Morgan. “Some things aren’t worth fighting and dying for.”

How to reach: Fulcrum Consulting Works Inc., (216) 486-9570 or www.fulcrumcwi.com

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Friday, 28 March 2003 06:31

Perspectives

What's it like to be a woman in business?

Seems like a logical question, especially considering the massive changes in the work force since World War II. In 1950, 33 percent of women worked outside the home; by 1999, 60 percent did. Today, women make up half of the labor force, but what does this really mean for female employees and those who employ them?

Despite numerous statistics that point to an increased representation of women in the work force, there are a few areas where the numbers are less than impressive. For example, only 9 percent of corporate officers in Fortune 500 companies are women.

But just as it's shortsighted to believe that being a woman in today's business environment is no different than being a man, it's also not enough to simply stereotype women's successes and behaviors.

There's no doubt the inclusion of women in the business world has changed the way employers view employees. Women business owners tend to have more gender equality in their work forces -- 52 percent of their employees are women. Women make up just 38 percent of the work force at the average male-owned firm.

Women-owned firms are also more likely to offer flextime, tuition reimbursement and profit-sharing.

So what are the issues unique to women in business?

When you talk about what it's like to be a woman in business, you have to take into consideration the past, the future and the state of the business world today.

In February, Smart Business brought together five area business leaders for a roundtable discussion on the subject. Suzanne Sutter, president of Things Remembered; Sister Diana Stano, president of Ursuline College; Alice Korngold, president and CEO of Business Volunteers Unlimited (BVU); Karen Sweeney, vice president and general manager of Turner Construction Co.; and Kathy Obert, president of Edward Howard & Co., were asked about business, leadership and corporate cultures within their organizations.

They talked about how things have and have not changed since they began their careers, how each succeeded and how they face the unique challenges and opportunities every woman faces in her career.

Smart Business: Let's start by talking about the basics of being a women in a career, some of the perceptions and misconceptions, and how things have changed.

Sister Diana Stano: Being a religious woman, I'm often seen as neutral. When I was getting my doctorate, I was the only woman in my class. I wasn't considered a woman, but I wasn't a man. I'm an 'it.'

We would all be at social gatherings, and all the men were down in the basement and all the women were in the kitchen talking about recipes and kids. I wasn't involved with either at that moment in my life, so the question is, 'Where do you go?'

Do I go downstairs with the guys, or do I go upstairs with the women, who I have nothing in common with other than being female?

Karen Sweeney: Even in a business setting, it requires you to figure out where you fit in. There is this informal network that men have. Decisions, strategic decisions, were made, and I would go to my boss and ask, 'Why didn't you ask me to join that meeting?'

And he says, 'Oh, he just came in here and sat down.'

I'm not socialized that way, to just go into your boss's office and sit down. So what I've tried to do is make the office more conducive to small groups and gatherings to kind of force the issue.

Kathy Obert: I just recently joined the Cleveland Chapter of the Young Presidents Organization. Until this month's event, there were no women in the Cleveland chapter of YPO.

YPO, every January, has an event. This January, 80 guys planned to go to baseball fantasy camp in Winter Haven. So I spent the last week playing baseball with 80 guys at Winter Haven, wearing an Indians uniform that I would never in my life put on.

There are two women in the chapter now and we were just one of the guys. It was like you (Stano) in the basement, but we were out on the ball field. Of course, all the men asked, 'How does it feel to be the only women?' And we said, 'We have a lot more in common with you guys.'

It was a good thing, and we have to do that. We have to put men at ease by going in the basement. It becomes incumbent on us to make them feel like we can be one of the guys and we want to go and throw the ball around.

That doesn't mean we have to be men. We don't have to be men.

Sweeney: You talk about being a man. In my field, you're out there with a hard hat and a tool belt ... and I knew that was going to be necessary to be accepted, to be credible and let them know that I was serious about my job, that I wasn't just out there to catch a husband.

Twenty years ago, everyone would come up to me and ask, 'What is a girl like you doing in a field like this?' I would say, 'Why can't I be interested in this?'

I think now it has become incumbent on women to step out and say, 'Look, we're different,' because women have so much to give. If I'm at a meeting and there is a woman there who has a strong personality and she steps up, everyone gasps.

And then they start to listen. Years ago, that wouldn't have happened.

Alice Korngold: It seems like there are more women of all different types at all different levels. I don't know about more comfortable, but (they) are more ready and willing to speak up, to participate, to be a factor.

Whether a person's style is more masculine or more feminine, I find them more comfortable saying, 'This is what I am. This is what I bring to the table. This is what I'm going to contribute. And I'm going to participate.'

That's what I think feels different, and it seems to be coming very naturally. I don't think assertive is the right word, but women are more comfortable saying, 'I'm playing, too, and I'm going to play as who I am.'

Stano: Women are more confident with who they are, and more confident with where they're at. Instead of trying to be somebody that you think somebody wants you to be, they are, 'Here I am, and I will contribute in any way I can.'

Korngold: It's coming from the women themselves.

There also seems to be a backlash against corporate America as increasing numbers of women and minorities are turning to entrepreneurship, once dominated by men.

Perhaps it's a sign of women's frustrations with corporate America and wage discrepancies, the obsequious glass ceiling and inflexible work hours.

As of 2002, there were an estimated 6.2 million majority-owned, privately held, women-owned businesses in the United States, employing 9.2 million people and generating $1.15 trillion in sales. In Ohio, between 1997 and 2002, the number of women-owned businesses increased by 32 percent, three times the growth rate of all employers in the state.

The number of women-owned businesses in the Cleveland/Lorain/Elyria area is estimated at more than 46,000, and they account for 28 percent of all privately held firms in the metropolitan area. They employ nearly 70,000 people and generate approximately $8.3 billion in sales.

Smart Business: The number of women entrepreneurs is increasing at a faster rate than the number of men. Why do you think this is? Are women frustrated with corporate America?

Sweeney: So many of my female counterparts have left because trying to assimilate to the culture was harder than trying to make it on their own. My mission, initially, was to break that barrier and figure out a way that I could make a difference and reassure women they could have a life, because when I came in, there were no policies on anything.

I took two maternity leaves, and every time, they didn't know what to do with me when I came back because they thought, 'Oh, she has kids now and she'll be leaving.' I kept forging ahead.

You have to keep making inroads. You really have to keep forging ahead and do what you want to do.

I had to figure out ways to get things done. Sometimes women try to insulate themselves and say, 'I'm the decision-maker.' Then you get somewhat isolated. I think you have to build a network. That's what men do. You have to build a network of advisers.

Stano: Historically, we started as an agriculture society and then went to an industrial society built on the skills and the strengths of men where they were needed more. Now, we are in a knowledge society, and it doesn't matter, or it shouldn't matter.

But we still have a whole history of how things have evolved. You have men that want to be protective of their wives. That is the way they grew up. They want to be the defenders and take care of things.

That is shifting. I think it is generational, and that younger people, younger men, recognize that.

Sweeney: A lot of it is the way business is going and changes in the law. When you think about how industrial culture was, with a very hierarchal structure, there were the management and the line positions, and never the two would mix.

The way that technology is changing, the way business is changing, businesses realize they get the best out of people when they do consensus building. We are becoming more effective at doing that.

You realize that businesses' strength is people, and not necessarily how the widget is produced.

Suzanne Sutter: I mentor MBA students, and I've been doing it for a long time, but I've noticed a lot of change in their attitudes in terms of their own career and what they want to do.

I'm finding that they desire a lot more flexibility. It is not that they won't commit themselves -- I've had a lot of talented women, younger and older, who are going back to grad school and want a new career. They are open to more options, and they also realize that they are going to take on an additional burden of child-rearing and family support or whatever.

They are much more open when looking at the career alternatives that they will consider. The world has changed in terms of alternatives.

Korngold: As an employer, the best investment I've made is keeping women who are having babies. It's a good business decision. You invest so much in finding the right person and training them, and it has paid off.

What is nice is that men have more choices now. Who needs what out of their career, their life, their family? It relieves the men of some of the pressure.

Smart Business: Is all of this coming to the forefront because both parents are in the workplace and both men and women are employees now?

Stano: This is an issue for men and women. It comes down to valuing people as individuals and their skills. That has shifted because the economy has shifted.

We recognize that people are the key, and that makes a difference -- I have a good person, and what do I do to keep this good person?

There are so many varieties of lifestyles and life choices; it is rather thrilling to think of the change. Before it was very black and white, (and we've moved) to a world with a lot of variety and personal choices that work best for everyone. That helps women, but I also think it enriches the workplace and family. And it allows each person to become what they need to become.

Sutter: There was a Fortune article about the top 100 companies to work for, and there was a strong theme that ran through about sensitivity and compassion for people and creating a culture of flexibility. There were other things. They all had great benefits, but it was all about the recognition for the role that the individual played in the company.

I think that is what it is really about, and it's going to take a continued effort on everybody's part in an organization.

Obert: That is not a male or female issue ... and I think we have to be very careful not to stereotype.

But even with the leveling playing field and work/life issues making their way into corporate culture, the majority of female employees still seem to hit that ubiquitous glass ceiling.

A 10-year study by the Kelly Business School that began in 1986 found the number of female directors at large corporations was decreasing. In 1986, 16.9 percent of board directors were women; in 1995, 16.7 percent were.

Women also hold fewer than 10 percent, or 600, of 6,274 of the board seats of Fortune 500 companies. However, 54 percent of the top 100 companies by revenue have multiple female directors, versus one-third of the overall Fortune 500 firms.

So why are women -- who make up more than half the work force, the majority of freshmen classes and an increasing number of graduate school students -- so underrepresented in top corporate positions?

According to Catalyst, a nonprofit organization that specializes in research on women's issues, senior executives were asked to name women's obstacles to obtaining a CEO position. The majority of men cited a "lack of management experience" and "not being in the pipeline long enough."

Women, however, reported "male stereotyping" and "exclusion from informal networks."

Smart Business: Are there specific challenges with regards to being a woman that make it difficult to get into a leadership position?

Korngold: There are real gender issues that women deal with, but I would also say, just deal with it. Be aware at the end of the day, be useful and productive and find out what you're good at and develop what you're good at.

Get your radar and draw on advisers and coaches, and people who will be helpful and people who will be supportive. Bow your heads and go do it. Be positive and don't whine about it.

Lots of people have obstacles. This is some of the stuff we have to deal with, so you deal. I will also say that those experiences have given me great strength and a tremendous sense of accomplishment.

Smart Business: The gender wage discrepancy remained virtually constant from 1955 through the 1970s. For full-time female workers, earnings increased in the 1980s, reaching 74.2 percent of men's earnings in 1997, then falling to 73.3 in 2000. This is still a real issue.

Korngold: Yes, that is a reality, but then I'm saying, 'Deal.' I don't mean to sound harsh, but what can you do? You get the information, present it to an employer, and if that doesn't get you anywhere, then maybe look for another opportunity. It is a real issue.

Smart Business: Do we fight this out in court or do we make inroads other ways?

Stano: I think you do both. You have some courageous women out there who are leading the cause and making everyone aware. And there are people in the rank and file who are just doing it where they are. Do the best you can.

But I agree, we have too many whiners. Life is life. Do what you can and move on. Whining and not doing anything about it is not making a difference.

Obert: Not playing the victim role. Yes, you have to be strong. Yes, you have to sometimes be a bitch. But we have an incredible toolbox available to us.

Maybe this is something that has changed, I don't know, but in the past you felt like you had to be more like a man, which you were then perceived as. You had to be strong and forceful.

But there is an incredible power in being charming, in smiling, such a power in hugging someone. I think a very successful female CEO will be able to be a bitch and also be able to hug someone.

Korngold: Get it off your chest and then move on. I see women bringing on more change because they are assertive and risk-takers. It is about saying, 'This salary thing is not right,' and doing the research and having a conversation.

It is figuring out how to work the system, to be useful and productive, and achieve what you want to get.

Smart Business: How do you do that?

Korngold: It depends on the environment you're in. It is about sizing up the environment, the players, the dynamics and the personality, and figuring out your alternative strategy to work with that.

Sweeney: Have your advocates and mentors. Have someone you trust to help you maneuver through some of the hurdles, people that have some honest insights.

You have to surround yourself and have advocates and people that you know you trust. Be around people that you know can get it done, because you can't do it all yourself. You have to trust people to carry out your mission.

Sutter: You have to develop really great radar. I was very fortunate. I was very young and they sent me to a psychologist so I could understand the interpersonal dynamics -- how men are socialized and how women socialized.

I was fortunate that I had that chance to learn that --the dynamics of radar. Sometimes you have to be demanding and tough, because it's about business and business outcomes, nothing more than that. Sometimes you have to be compassionate and loving and caring and understanding. I think you get credit for both.

You have to be resourceful and surround yourself with people that help you interpret what's going on and how to maneuver the mine fields. I line up my resources to interpret what's going on to avoid situations, especially when it's a really broad-based strategical business issue and you are trying to negotiate certain outcomes.

Stano: And you have to make mistakes. What you do is, you learn from them and never repeat them. You may make new ones, but you say, 'I've learned from this one,' and don't beat yourself up.

Smart Business: Do we pigeonhole ourselves with too much discussion and reinforce our own stereotypes? Do we assimilate to the culture or change it?

Sutter: You do both. At first you have to be competent. Then you challenge. You have to produce results. I helped create an organization where women were accepted.

You never get to take those things on if you're not there. And you have to have the courage and the confidence to do that. How to reach: Business Volunteers Unlimited, (216) 736-7111; Edward Howard & Co., (216) 781-2400; Things Remembered, (440) 473-2000; Turner Construction, (216) 522-1180; Ursuline College, (440) 646-8101

Thursday, 27 February 2003 08:14

Bargain hunters

With intense consolidation and quarter after quarter of tough times, many industries are experiencing, what some call a market consolidation and others just call bad times.

But one business's misfortune can be another's opportunity, and those that take advantage of opportunities reap the rewards.

One of the best opportunities manufacturers have right now is to take advantage of the great bargains on used equipment.

"It's a great time to buy," says Paul Betori, owner of HGR Industrial Supply Inc.

Some businesses are replacing old equipment, while others are looking ahead.

"I see some business buying things for future expansion ... they are willing to invest in the future," Betori says.

It's good old supply and demand economics -- more machines are on the market, and there are fewer companies that need them.

"Those laws of supply and demand work," and as a result, says Betori, "a lot of traditional tools and machines have gone down in price."

With the integration of electronics, manufacturing equipment is changing in leaps and bounds, with newer and better machines replacing older, slower ones every year and rendering the older ones obsolete.

But as Betori says, obsolete is in the eye of the beholder.

"We have a machine here that is slower and doesn't have the same technology as a new one, but it still works," he says.

In the David vs. Goliath world of manufacturing, it seems the little guy is prevailing. The recent spate of closing and consolidations in the manufacturing industry has meant the closure of some large companies but it has also created opportunity for smaller start-ups.

"We've seen some of the people who have been laid off starting their own businesses," says Betori.

Betori's suggestion when looking for bargains is to shop early and often.

"They (manufacturers) should be out there looking and thinking ahead. These prices will change when the industry picks up," he says.

He says prices hit a low last spring. And if his customers and market prices are any indication of what is to come for the industry, Betori is cautiously optimistic.

"I think that manufacturing is going to be up come the end of the year," says Betori. How to reach: HGR Industrial Surplus Inc., (216) 486-4567 or www.hgrindustrialsurplus.com

Wednesday, 26 February 2003 19:00

Front runner

In the midst of the frenzy of media attention devoted to dot-com start-ups, overvalued IPOs and accounting discrepancies, well-run companies were labeled as boring and often ignored. Who wanted to read about a good company, business editors reasoned, when so many others were falling apart?

At face value, Wickliffe-based Lubrizol Corp. is one of those "boring" companies. A fluid technology company with nearly $2 billion in sales, it delivers consistent sales revenue, steady growth and shareholder dividends. It's no wonder, then, that in these "the worse news, the better" days of journalism that Lubrizol has flown beneath the media's radar.

"We are conservative," says William G. Bares, Lubrizol chairman and CEO. "We are constantly testing the water and deciding what direction to go in."

When the dust finally clears from this latest business cycle, it will be the time-tested, well-run companies such as Lubrizol that are left standing. After all, they're the ones that are in the midst of a technological and knowledge revolution that we are just beginning to understand.

And these same so-called boring companies continually strive to find ways to reinvent and retool their core businesses while remaining profitable. Further, they have already recognized and addressed the growing public distrust of corporate America.

Interestingly, there just may be quite a story in running a business responsibly.

Squeaky wheels

In some ways, one of the most impressive aspects of the Lubrizol story is that it has remained competitive in the technology business for three-quarters of a century. In a world in which companies make the Fortune 500 list one year and fall from its ranks soon thereafter, Lubrizol has displayed impressive staying power.

The key, says Bares, "is to constantly balance the long term versus the short term."

The company was founded in 1928 as Graphite Oil Co., with a lubricant designed to eliminate the squeak caused by the leaf springs in early model cars. Graphite Oil also developed the first of its many motor oils and soon changed its name to Lubri-Zol.

Fast-forward 75 years and drop the hyphen. Lubrizol is now one of the area's largest and oldest public companies, with more than 4,500 employees in 60 countries. It has successfully weathered this most recent economic downturn through smart and sound management practices. More important, it has continued its tradition of producing a healthy year-end cash flow.

"Lubrizol has 35 percent of the market share and is the leader in the industry," says Saul Ludwig, an analyst with McDonald Investments who follows the venerable firm. "They only have three other competitors in the transportation sector. They are very disciplined, and therefore generate a lot of cash."

A long history, however -- no matter how successful -- does not ensure a company's future, especially when the industry the company was built upon is rapidly changing.

The transportation lubricant industry continues to be a whopping 80 percent of Lubrizol's product portfolio, and there's little doubt it has benefited tremendously from the automobile revolution as each new technological advance in transportation translates into new opportunities for Lubrizol.

But keeping up with the whims of Detroit and edicts of the government requires significant capital investment, patience, and a lot of trial and error.

"Age doesn't give you an advantage," says Steve Di Biase, vice president of emulsified products.

He stresses that the company places a high premium on its ever-changing technology.

"We have 800 people in R&D globally ... and 90 PhDs," he says.

Even when the terms "R&D" and "return on investment" were relatively new, Lubrizol was reinvesting and pushing the technology of the day. Historically, it has spent between 8 percent and 10 percent of its sales revenue on R&D.

In 2001, that meant $160 million.

"Products become obsolete," says Di Biase. "It used to be that it would be obsolete in eight years or so. Now it is less than four. And there are so many different industries -- trucks, cars with different parts like gears and transmission -- and every one of those products are different."

But it isn't just the products that become obsolete. The real question that Lubrizol and the rest of the automotive suppliers face is what will happen to the combustible engine, its petroleum-based fuel and the automobile in five, 10 or even 20 years.

That is the future that stares Bares and his staff in the face every day.

Textbook case

While most of the business world's attention was myopically focused on high-growth start-ups and record-high initial public offerings, Lubrizol remained true to its roots. Its growth was relatively slow and methodical, not so sexy until you look at what the numbers actually mean.

Revenue for 2001 was the highest in company history, reflecting a 4 percent increase from the previous year's record shipping volumes. Lubrizol's market value and stock price jumped 36 percent in 2001, compared with a 13 percent decrease for the S&P 500.

"Lubrizol is a well-run, disciplined organization," says Ludwig. "The company has a good depth of management ... they are successful and have a good track record."

While many manufacturers struggle to meet changing consumer whims, Lubrizol's products are somewhat resistant.

"The company is somewhat countercyclical," says Di Biase. "Our products continued to be consumed, and when times are bad, our commercial customers tend to maintain their equipment rather than buy new."

Over the years, Lubrizol's transportation and industry segments have grown organically through new products offerings. Recently, however, Bares has added a new twist -- a relatively aggressive acquisition strategy.

Since 2000, in an effort to expand into markets as diversified as personal care products, defoamers and polyester resins used in printing inks and adhesives, Bares has engineered the purchase of six companies with combined annual revenue of more than $118 million.

Ludwig says that when you take into account that Lubrizol's core business generates revenue in the hundreds of millions of dollars, its acquisition strategy is not only integral to its future, it is also a form of cash management.

"Managing and utilizing cash flow is a big issue for the company," he says. "The challenge for the company is to deploy its cash efficiently."

"It's not easy to grow in our industry," admits Di Biase. "It's hard to generate new growth, and you have to make sure the growth is real."

A variety of market forces -- and conditions like improved engine design, longer drain intervals and frequent product modifications -- have produced a global growth rate for transportation lubricants estimated at a mere 1 percent a year. And since the passage of the Clean Air Act, government regulations and standards have dictated much of the new product research.

"The government defines the rules of the game," says Di Biase. "Oftentimes, it creates the need."

Accordingly, with its heavy reliance on fluid technology for transportation, Bares and his team have spent heavily on new technology development.

But Lubrizol's research and development efforts have resulted in both triumph and failure. The tricky part has been balancing the two well enough to realize a return on the company's investment.

Bares says he learned this lesson after the company scrapped plans for developing the world's first industrial plant-based lubricants through genetic mutation.

"You can't fall in love with a technology," he warns.

A notable positive result of one such doomed love affair was Lubrizol's gift of $22 million worth of patents last year to CAMP Inc. The patents cover technology based on a fluid that can carry an electrical current. Bares hopes some day to see the process commercialized.

Knowing when to let go and move on has been a crucial part of the company's success, he says.

"We have processes," Bares says. "We try the idea. If it doesn't pass the muster, pass the milestone, we don't pursue it. With technology and R&D, you are not going to bat 1.000. You have to be a .300 or .400 hitter."

As conservative as that approach may sound, it is not risk-free. But for Lubrizol, the real risk is in not taking any risk at all.

Sustainability

In order to take the right calculated risks, and balance the long and short term, Bares challenged his management team to rethink the company's overall vision. After a few years of planning, "Creating fluid technologies to make the world a better place" emerged as the formal mission statement.

"It's relevant to what we are doing today," says Di Biase. "We have a strong position on the environment."

Thirty years ago, any company, let alone a business-to-business industrial chemical company, would have been hard-pressed to tout environmental consciousness in its mission statement. But times have changed. Wall Street, investors and consumers expect more from large corporations.

The discussion has also changed. Now there's a real issue about sustainability, on a business, social and environmental level.

"Consumers are becoming more educated," says Nick Zingale, president of Affinity Consultants, a Canal Fulton-based firm that helps manufacturers maximize their environmental, health and safety systems. "There is a fallacy that you have to be rich to be concerned, but surveys show they have a concern no matter what walk of life they come from."

What was once a tenuous relationship between manufacturers of chemicals and environmentalists has become cooperation as companies make decisions that are socially and environmentally responsible.

"For many people, chemistry is synonymous with pollution," says Di Biase, who stresses that he doesn't want to overstate the issue. "We tend to think about being environmentally responsible rather than environmentally friendly."

For the most part, though, environmental issues wax and wane in the public consciousness. Issues like dolphin-safe tuna and oil-soaked wildlife grab our attention, then fade. But ironically, it is the issues that are very often invisible that pose the greatest risk.

As part of its mission, Lubrizol effected a 60 percent reduction in annual hazardous waste generated between 1990 and 2000, and a 50 percent reduction in annual air emissions at its Wickliffe facility.

Another part of the sustainability issue resides in the company's new brand strategy aligned to its strategic vision: Improving the world we live in by providing technologies that result in products that work better, last longer and benefit the environment.

"It guides our people," says Bares. "When they think of a new idea, it has to fit."

Di Biase calls the result an indirect benefit.

"It's part of our corporate DNA," he says. "We always had emphasis on the environment. It's been an underlying philosophy to do the right thing."

And consider this. The life span of automobiles has increased from an average of five years to 10 years. It is an especially salient issue during a recession, when capital equipment expenditures are fewer and maintenance is extended for older vehicles.

"We translate it three ways," says Bares. "We make things that last longer, run better and benefit the environment."

Zingale describes it another way. "It's a three-legged stool," he says. "Companies have to balance their economical, social and environmental responsibility. Companies are publishing more than what they did economically. They are saying, 'Here's what we did socially, and here's what we did environmentally.'"

Motoring ahead

In 1997, the EPA proposed a cap of 15 parts per million (ppm) of sulfur in diesel fuel beginning in 2006, a significant reduction from the current U.S. standard of 500 ppm.

The regulations, recently upheld by the U.S. Supreme Court, are designed to reduce heavy-duty emissions by between 90 percent and 95 percent from 2007 to 2010, and lower diesel fuel sulfur content by 97 percent from 2006 to 2009.

Close on the heels of that decision, the EPA released a 651-page diesel health assessment report that cited occupational health studies and the results of tests on animals, which revealed that diesel emissions are, in fact, carcinogenic.

As part of its commitment to a better environment, Lubrizol developed and commercialized a new product called PuriNOx, a fuel additive designed for use in diesel engines. Using water to combine with the fuel, the product has shown to reduce dangerous pollutants by up to 20 percent.

But this may simply be a stopgap measure. In his most recent State of the Union address, President Bush laid the groundwork for his administration's Clear Skies initiative. One of his most memorable statements referred to a hydrogen-powered automobile, upping the ante on the diesel emissions standards his father set in 1990.

"The automotive companies are scrambling to come up with alternative fuel technology or moving away from fossil fuels altogether," says Zingale.

But don't expect it to happen overnight. Change takes time, although the winds of change are beginning to blow louder and harder.

Bares is well aware of this. The overall demand for lubricant and fuel additives is slowing in mature markets such as North America and Europe.

"It will have a negative effect on some of our business but we support it ... we have known it for years," says Bares. "That's why we are moving into other areas, like coatings."

Lubrizol, he says, is poised to reposition itself by entering the business-to-consumer world of paints and personal care products as well as by applying its vast knowledge to entire fluid-based systems beyond automotives.

"It's about creating value," says Di Biase. "We are really selling our knowledge. It's different than our traditional business, but it's aligned with our vision. We don't want to be constrained by the past."

Because of these changes, the next five years will be crucial to Lubrizol's success.

"You have to have a vision," says Di Biase. "You can plan out five to 10 years at the most, but beyond that, any plan would be a fallacy. There is a shifting of power. With the change comes some choices."

The industrial revolution, which shaped the last few generations, is giving way to an information revolution, which could create as much change in just one generation.

"Business is not on its own little island anymore," says Zingale. "The role that the Tycos and Enrons and Worldcoms played, and what those companies brought to light, is that at a much higher level in organization, there needs to be more accountability and responsibility."

That's where companies such as Lubrizol come in.

To corporate leaders such as Bares, there's a hope that it does matter that Lubrizol has made a conscious effort to decrease emissions from its laboratories, that it has remained loyal to its headquarters, invested in mentoring projects and donated patents to local organizations.

And it should make a difference that a significant portion of the company's research and development dollars are spent trying to develop clean air projects and plant-based, nonpetroleum lubricants that are environmentally friendly.

Perhaps Bares summed it up perfectly in his letter to shareholders in Lubrizol's most recent annual report: "Reflecting on the events of the past year only strengthens our determination that our vision -- to make products work better, last longer and benefit the environment -- is the path to improved shareholder value." How to reach: Lubrizol Corporation: (440) 943-4200 or www.lubrizol.com;" Affinity Consultants: (330) 854-9066 or www.affinityconsultants.com; McDonald Investments, (216) 443-2300

Thursday, 30 January 2003 19:00

Hot wheels

At one time, buying a wheelchair simply required finding a company that makes them and placing an order from among the limited selection of big bulky, unattractive products.

Today, the customer has a vast array of wheelchair models to choose from, and you can buy your custom wheelchair or other medical products online.

In late 2001, Invacare revamped its Web site to meet the changing needs of a growing consumer base. Those shopping for a wheelchair can see a 3-D demo of the company's newest products, like its super lightweight A-4 model with adjustable center of gravity feature and color choices that include wet black with twilight sparkle, electric purple and jeweled green.

Beyond showcasing Invacare's product line, which includes everything from walkers to titanium sport chairs, since 1999 Invacare's e-commerce initiatives have removed more than 250,000 calls from its call center, saving time and labor costs.

The site also allows customers to download printed material including price lists, owner's manuals and service instructions, and at 1,600 downloads a day, the savings in printing, mailing and storage is about $60,000 annually.

Invacare has also seen a positive change in online sales. With the total number of online and EDI orders at more than 22 percent and sales at approximately 20 percent, or 2,000 orders per month the annual savings in processing costs is about $370,000.

Using databases and XTML programming, external health care vendors can build their own transactional Web sites with very little technology. Vendors, heath care facilities and individual consumers can also register and access parts catalogs and order online.

By August 2002, Invacare had nearly 5,000 registered customers and approximately 2,000 registered physicians, clinicians and caregivers.

With an aging population living longer than ever, Invacare is proving that it understands its customer base will be asking more from its products. How to reach: Invacare Corporation: (440) 329-6808

Friday, 20 December 2002 09:10

Defective trust

Regardless of what may or may not happen with the estate -- a.k.a. death -- tax in the next few years, it's a good idea for those with large estates to begin as early as possible to decrease their estate tax liability.

One way to do that is to set up a type of grantor trust, sometimes referred to as a defective trust.

"With a defective trust, the grantor is taking advantage of an anomaly in the income and estate tax laws," says J. Michael Kolk, managing partner at Cohen & Co.'s Akron office. "It is a technique that is used on income-producing assets like S-corps, LLCs, partnerships and rental properties."

A defective trust deals with the double-edged sword of appreciating property and assets in estate planning. The trust buys the asset and issues a note for the value after a gift of at least 10 percent is seeded to the beneficiaries.

"For estate tax purposes they are creating a trust that is outside their taxable estate," says Kolk.

The first benefit comes after grantors sell an appreciating asset to the trust, because they are selling something to themselves and it is not subject to tax. A note is issued freezing the value of the asset for the grantor, and it creates taxable income that may help lessen the overall value of an estate in the long run.

The trust works best with high-worth individuals who feel confident they will be around long enough to benefit from the sale.

"During the period this grantor trust exists, they are still taxed ... basically, they are paying the tax for the grantee so that at the end of the note it is in their name and there is no tax," says Kolk.

One important thing to keep in mind is the importance of "seeding" a percentage of the property's value. According to the IRS, the grantor cannot maintain "a life interest" in the property, or it can be deemed part of the estate rather than a separate trust.

Kolk recommends seeding at least 10 percent.

"Ten percent seems to be a safe harbor. If you try to get too aggressive ... (and) 'retained an interest,' they will bring it back into the estate." How to reach: Cohen & Co. (800) 229-1099 or www.cohencpa.com

Tuesday, 26 November 2002 08:36

The adjuster

It's probably safe to say that it hasn't been a good year for the 401(k).

While employees are dealing with plummeting stock values, employers are finding themselves being held responsible for inadequate plan and fund options.

Plan sponsors (employers) have a fiduciary responsibility to plan participants (employees), and that responsibility can be interpreted in different ways.

"There is a higher standard now," says Chris Chandler, a consultant with Hartland & Co. "Especially with what is going on with Enron. There is a case being dueled out in court right now where the participants were limited to certain investments."

One of the ways employers are combating employee dissatisfaction and potential liability is by offering the services of a third-party adviser.

"A 401(k) advice provider is a firm that is independent from the plan sponsor and the service provider," says Chandler. "They are dedicated to offering advice to the plan's participants."

Advice providers offer access to independent financial planning, investment advice and retirement planning. However, they are not allowed to advise a participant what to do.

"They can offer the investment options but they are not allowed to offer investment advice," says Chandler.

Third-party consultants began appearing around 1995 and have traditionally made agreements with plan providers. Some larger companies pay for third-party advisers, but the service is increasingly being offered with a co-pay ranging from $10 to $60, depending on the level of advice.

Companies pay for a basic level of service, and participants have the option of paying for more comprehensive consultation. This can include having an adviser assist employees with every part of their investment and retirement portfolio, not just products offered by the employer.

Chandler says an employee's use of third-party advisor services is linked to the amount that employee has to pay.

"Adoption is slow in the beginning years," says Chandler. "But if the companies pay for the service, the adoption rates are much higher.

"The ultimate decision-maker is the plan participant, but the fiduciary responsibility is to provide investment to create a diversified portfolio. They (the employer) are responsible for making sure the investment options are competitive." How to reach: Hartland &Co.: (216) 621-1090 or www.hartlandco.com

Tuesday, 26 November 2002 08:08

Embracing change

There's no doubt that the standards by which corporations conduct themselves have changed, as scandals at companies like Enron, WorldCom and Tyco have brought to light some of corporate America's ethical shortcomings.

But not all of corporate America fits that mold, and even before the revelation of these problems, many businesses were already focusing on improving corporate identity.

Some have learned what Charter One Bank did, that "such an ambitious goal would require strategic planning and execution, multifaceted interventions and developing new competencies at both the individual and organizational levels," according to its mission statement.

Charter One and senior vice president and manager of administrative services Mike Bourgon made a deliberate decision to "be proactive about social contributions ... (and) transform the organization into one of diverse representation and inclusiveness."

It's a huge undertaking, but anything worth doing is.

"We fully understand that these words must be acted upon at the individual and organizational level, if our commitment to valuing diversity and inclusion are to be appreciated as genuine," says Bourgon.

Since the decision of Charter One's management, the bank has focused on increasing the number of minority vendor and supplier relationships, and on community home lending and active recruiting for more diverse employment.

All this is coupled with employee community service and corporate giving, especially in what Charter One refers to as the inclusion zone. The goal, says Bourgon, is to develop "closer, more direct community contacts in the markets in which we serve and in those we intend to serve."

Nothing less than a corporatewide awareness would achieve the goals Charter One wanted to realize.

Charter One "(increased) our minority vendor, supplier relationships as a means of reflecting our commitment to representing and meeting the needs of the entire community," says Bourgon.

To achieve its goals, Charter One management is "evaluating and addressing the diversity management skills-building needs of its managers ... (and) developing new competencies at both the individual and organizational levels."

To date, the bank has spent more than $10 million to assist minority vendor development. Other beneficiaries of its giving include the United Negro College Fund, Centers for Family and Children, Cleveland Tomorrow and the United Way.

Its commitment is nothing short of "(taking) a leadership role to helping to transform the Greater Cleveland area into a model for building and maintaining inclusive relationships with all segments of the population within the community at large." How to reach: Charter One Bank, (216) 566-5300.

Thursday, 31 October 2002 09:46

The changing face of business

There was a time not so long ago when it was impossible to open the pages of a newspaper or business magazine without seeing a story about some young, hip entrepreneur who founded a business no one really understood and spent money that, it turned out, no one was really accountable for.

Today, however, those entrepreneurs, the so-called whiz kids, are at best more annoying than fascinating to anyone who has actually started and ran a real business. Worse, for everyone who's watched their 401(k) money disappear and their mutual funds shrink, those unrestrained entrepreneurs of the new economy were, at times, dangerous.

Chalk it up to irrational exuberance and hope we've learned our lessons about business and will never be as gullible again. But the fact remains that there is a lot of pressure on the entrepreneur.

Conventional wisdom has all but abandoned the idea that government drives growth. Mix in a growing mistrust of large corporations and their commitment to our communities, and you're left with the reality that when it comes to leading and growing any economy, the individual entrepreneur carries the burden.

That's a lot of pressure for these small businessmen and women, but history shows they've always been up to the challenge. According to the National Commission on Entrepreneurship, since World War II, 67 percent of inventions and 95 percent of radical inventions are the result of entrepreneurial ventures.

Approximately 10 percent of American jobs disappear annually because of business closures and downsizing. As a result, nearly 13 million new positions must be created every year to maintain a healthy job market.

But recent economic woes have left entrepreneurs a little gun-shy, at least relative to the start-up crazed 1990s. Irrational exuberance, as Federal Reserve Chairman Alan Greenspan dubbed it, has given way to cautious risk-taking and a conservative investment environment.

According to the Global Entrepreneurship Monitor (GEM), entrepreneurial activity in the United States -- the percentage of the population involved in the start-up process or in business less than four years -- last year plummeted to 11.7 percent, from 16.7 percent in 2000.

Enthusiasm has also taken a beating. According to GEM, only 35 percent of adults believe good opportunities will develop over the next six months, down dramatically from 52 percent in 2000 and 57 percent in 1999. And venture capitalists are feeling the heat, with GEM reporting that many younger venture capitalist firms are closing, while existing firms are far less likely to invest in seed-stage companies.

Call it a backlash resulting in part from the Internet bubble burst or simply pragmatic risk assessment during a recession, but one thing is certain: Business is changing again.

Today, we are seeing a different type of resilient businessperson. Minority-owned business are growing four times faster than other small businesses. These new ventures employ 4.5 million people while generating $591 billion in annual revenue.

The face of business is changing.

It's very often younger, female, and, in many cases, not white. According to a study entitled "Trends for a New Century" by the Research Institute for Small & Emerging Business, "The makeup of entrepreneurship will change dramatically in the next 10 to 15 years as demographics shift ... the next generation of entrepreneurs are predicted to be female and Hispanic or African-American."

Between 1973 and 1992, the U.S. Small Business Administration granted $5.7 billion in loans to women. That increased to $12.2 billion between 1993 and 2000. Of the SBA's Community Express program, two-thirds of the loans went to woman and minority business owners.

Not only are business owners changing, the types of business they're starting are also different. These new entrepreneurs are finding new markets and new customer bases.

Although we witnessed something similar with the dot-com boom, the difference is that these new businessmen and women are being held -- and holding themselves -- to a stricter and more conventional standard of success.

The flan that ate Cleveland

Ten million people visit the West Side Market every year. And for as long as many Clevelanders can remember, the immediate area surrounding the market has been at best an eyesore and at worst dilapidated and dangerous. So why pick an area such as West 25th to start a bakery or cafe?

Alma Alfonzo, president and co-owner of Lelolai, an Hispanic bakery, says the answer is simple -- she believes the city is committed to developing the area.

Alfonzo and her sister, Maria Sapia, who is co-owner and the baker behind the bakery, were born in Puerto Rico and came to the United States 23 years ago. And, although she is not forthcoming about her age, Alma Alfonzo admits she spent more than a decade working in hospital administration before going out on her own.

Inside the bright white café, Alfonzo points to a place on the floor.

"There was a big hole there," she says. "I remember in the beginning, I would bring people in and they would say, 'I hope you know what you're doing.' But you have to know what you're doing. You have to envision it and get others to envision it."

Alfonzo says when she was toying with the idea of opening her own business, she saw the city making a commitment to improving the area.

"Basically I was interested in the fact that they had plans," she says. "There was such a commitment to improve the area, we wanted to be a part of it."

There was risk, but Alfonzo had confidence in her business abilities and her product.

"This is a new concept," she says. "There was no such thing as a Hispanic bakery, and there is no competition at this point."

There are, of course, other bakeries, but Alfonzo's is positioned close to downtown. That leads to visits by a baseball player or two, and occasionally the mayor and a few judges, all looking for a Cuban sandwich, coffee and the Lelolai speciality, the flan.

If you don't know what a flan is, Alfonzo is planning to change that. If you've never had the pleasure of a flan or crème caramel, she says the closest description is a sort of pudding or Jell-O alternative. The basic ingredients are sugar and eggs, and it is a staple in many Spanish cultures.

Alfonzo admits that what is so common in Puerto Rico is exotic for some Clevelanders.

"There is a whole education to the flan," she says. "You have to flip it over, there's a sweet sauce."

There is also an education for her bakery's suppliers.

"Most of the ingredients come from Puerto Rico," she says. "It was difficult to explain what I needed, but it's getting a lot easier."

Suppliers have their work cut out for them. According to the 2000 Census, the number of Hispanic-owned firms has increased 12.8 percent in the last decade. That translates into 1.4 million businesses with annual sales growth of 24 percent.

Those statistics weren't Alfonzo's reason for starting the business, though. Rather, she had a good idea, received a loan from the SBA, and, in March 2001, the economy hadn't tanked yet.

"We started when things were positive," she says. "If I had waited until after Sept. 11 ... it made us re-evaluate our goals and postpone the second phase of the business -- the wholesale side."

There was another factor -- a growing Hispanic population in Cleveland.

"Originally, when we put the business plan together, it was with the Hispanic market in mind," Alfonzo says. "But actually, 70 percent of our customers are non-Hispanic. It was a pleasant surprise. It really says a lot about how diverse Cleveland is."

The other surprise was the quick success of Lelolai. The café is already surpassing the average sale amount per customer in the industry.

"The potential is enormous," Alfonzo says, adding that she won't rule out franchising the café, expanding the wholesale flan business or moving into other markets.

She is currently working on restaurant and grocery store distribution, as well as moving the flan into public schools, hospital and nursing homes to capitalize on its high protein content. But in the end, Alfonzo has one simple goal: "Make flan the staple in the American diet."

Punk printing

There's a good chance that the oldest piece of clothing in your wardrobe is a T-shirt -- faded, ripped or threadbare. You can't part with it because it's from your favorite band or that show you saw, or perhaps from your favorite sports team's best season.

It's not just a T-shirt. It's a moment in time. A memory. Not bad for the $15 you paid for it.

One would think the T-shirt market is saturated, with little room for newcomers. But two local entrepreneurs have carved out their niche in the market.

Jacob Edwards and Dameon Guess' Jak Prints is an entertainment promotion and apparel company that caters to bands, artists and clubs, a market often ignored by traditional printers.

"We both played in bands," says Edwards, the 24-year-old president. "We would work for awhile, then do something really irresponsible and quit the job to go on tour."

The two were living on and off on the road, and out of necessity, Edwards was creating his own T-shirts and promotional products.

"After awhile, other bands started asking about my T-shirts," says Edwards.

And what began as him doing favors for other groups turned into a full-fledged apparel company.

At the same time, Guess was free-lancing as a Web-page designer and signed on to design his childhood friend's Web site. But when the site was finished, Edwards realized what Guess already knew -- that the two should go into business as partners.

"It was right there the whole time, and one day he called me to see the site and I walked up to the computer and it says, 'Jak Prints' instead of 'Jak Apparel.'" Edwards immediately built a desk for Guess in his small office and the collaboration began.

Guess, then 24, and Edwards, then 22, became almost accidental entrepreneurs. They may seem young by conventional standards, but today more and more businesses are being started by entrepreneurs in their 20s. According to the Kauffman Foundation, young men between the ages of 25 to 34 are one of the most active demographic groups when it comes to entrepreneurial activity.

The youth market is nothing to sneeze at. Twenty-five percent of the U.S. population is under the age of 18, and youth in the urban and inner-city areas alone represent $300 billion in buying power. When you factor in college students, who have roughly $100 billion in discretionary money, you're talking about a lot of potential dollars.

A one-stop entertainment, promotions and apparel outlet, Jak Prints originally marketed specifically to smaller independent bands, local clubs and art galleries. Today, its job list includes work for U.S. Rep. Stephanie Tubbs-Jones, Derek Hess and a several nationally-known bands.

Walk down West 6th Street or near the Rock Hall and you'll see many examples of Jak's influence -- postcards, posters and other eye-popping pieces of art announcing the latest event, show or exhibit.

"We are one of the biggest in town now," says Edwards. "We are really quick, everything in-shop can be turned around in seven to 10 days."

Their understanding of the business comes from knowing the industries they serve.

"Our customers will call up and say, 'I'm in Seattle but I will be in L.A. in three days and I need shirts sent to this club," says Edwards.

Most printers, he claims, see this type of customer as a logistical nightmare and charge accordingly.

"I don't think these other printers know how important promotion is to these bands," he says.

But Edwards and Guess know. In fact, when they were starting out, they went so far as to drive T-shirts to a band appearing in Washington, D.C.

"It's because we know what it's like," Edward says. "We've been on tour, and we've been in a van for months."

These bands, he says, live and die by promotion -- T-shirts, posters, stickers and flyers for shows -- and Jak Prints provides one-stop shopping, as well as cutting-edge design furnished almost entirely by local talent.

Guess says the use of local talent is key, not only to support the creative community in Cleveland but also to keep up with local and national trends.

"If we need to do a hip hop design and we hire someone into hip hop, they help us by keeping us abreast of the scene," he says.

Guess and Edwards talk like seasoned business pros about niche marketing and maintaining good relationships with customers, so it's often difficult to remember they are self-proclaimed skate punks who dropped out of high school. But it is this level of professionalism and industry knowledge that has landed them such high-profile clients as Atlantic Records and the Rock and Roll Hall of Fame.

And unlike many of their older, more experienced entrepreneurial brethren, Guess and Edwards didn't acquire their seed capital from a bank, nor have they ever written a business plan.

"The business started with zero," Edwards says. "I installed a waterfall at first to buy a computer, Dameon installed carpet, and that was all invested into the company."

But that doesn't mean the pair discounts their place in the business world.

"We are legit," says Edwards. "We have a lawyer and an accountant. We don't make the books too hard, and we don't walk in the gray area.

"It's not easy running a business in Ohio -- there are more acronyms out there you have to cut checks to every month, every quarter."

Something in the wind

Manufacturing may not hold the lofty position it did in Cleveland at the turn of the century, but it's still an integral part of the Northeast Ohio economy. And like the rest of the business community, manufacturing is undergoing change.

Holly Harlan has been through many of these changes. An industrial engineer by training, she has spent more than 20 years in manufacturing. Since the Iowa native moved to Cleveland, she has worked with General Electric, CAMP Inc., WIRE-Net and ShoreBank.

She admits she was "looking for a mission in life. I enjoyed what I was doing, but it was not quite my thing."

The story goes that she went to a talk by a sustainability expert and walked out knowing she wanted to be a part of the new movement.

"I realized there was so much opportunity," says Harlan.

The sustainability movement, she realized, would open up a whole new market for products and processes.

"There's all this business opportunity. When you think about it, it's really low-hanging fruit," she says.

Sustainability means a lot of things, according to Harlan's Web site www.e4sustainability.org. The movement is based on three general principles --reduce, recycle and reuse -- and it can apply to any environments.

This includes "Creating products, services, buildings and communities that improve our quality of life while maintaining the capacity of the environment to provide for future generations."

Harlan focuses these principals on manufacturing processes, where they not only help the environment but decrease costs.

The point is to make business understand that sustainability is not just about being responsible, it also makes good business sense.

That's why Harlan sees herself as a consultant, not an activist.

"I started in business, and I've worked in business for 20 years before starting this," she says.

The "this" she is referring to are her latest enterprises, Entrepreneurs for Sustainability, a not-for-profit dedicated to education and awareness, and Eco-Innovations, a for-profit consulting firm.

"I wanted to put all my energy in this (sustainability), but I still had to make a living," says Harlan.

The organizations fill two distinct needs, while working together to promote awareness and provide assistance to those companies and entrepreneurs looking into sustainability.

Because she had worked with start-up divisions and departments for most of her career, launching her own venture wasn't much of a stretch. But, she points out, those previous risks were taken with someone else's money.

And considering that 82 percent of investors chose a "strong management team" as the single most important element of a business proposal, with a "good business idea" a distant second at 34 percent, entrepreneurs with new ideas can have trouble finding financing.

Luckily for Harlan, the idea of sustainability was making its way into the Cleveland business community's lexicon, with groups like Eco-City Cleveland and the Green Building Coalition raising awareness. So she wrote a business plan and secured funding from The Gund Foundation and the ShoreBank Enterprise Group. With this support, a board of advisers and help from her friends, Harlan has begun what she calls a journey.

One of the advantages she has when working with the manufacturing industry is the fact that she's experienced and understands her clients' priorities.

"I've run plants, so they will listen to me," she says. "I'm someone from the inside. And I think there is money in it (sustainability). The key is to be inclusive."

However, in order to integrate sustainability ideas and processes in businesses, Harlan recognized that education would be crucial. She also understood that the education provided by Entrepreneurs for Sustainability would create more opportunities for Eco Innovations.

"I realized to get this to move faster, I had to work with entrepreneurs," she says.

She is also brokering deals with some of the bigger companies in Cleveland, helping with waste, recycling and green building standards. Explains Harlan, "I've had people say, 'You make me feel guilty because you opened my eyes to it, and now I can't go back.'"

Business is business. But history has shown that it's cyclical. Part of those business cycles is the constant element of change. New entrepreneurs like Alfonzo, Edwards, Guess and Harlan definitely examples of that change. And if history is repeating itself, there are more to come. How to reach: Lelolai Bakery & Cafe, (216) 771-9956; Jak Prints, (440) 942-6324 or www.jakprints.com; Entrepreneurs for Sustainability/Eco-Innovations, (216) 371-1177 or www.e4sustainability.org

Friday, 30 August 2002 05:58

All the rage

 

For investors, biotech is both a great opportunity and huge risk, especially in the case of drug discovery.

If a product goes to market, a company and its investors can make back their investment and much more. But the big risk comes in funding research and testing a technology that isn't ultimately commercialized.

More than one company has made the mistake of putting all its proverbial eggs in one basket. Even a good product can get caught up in the approval process and bankrupt its investors.

Gil Van Bokkelen knows this. That's why Athersys, Cleveland's most talked about biotechnology company, has taken a different approach.

"There are biotechnology companies out there that want to be more fully integrated," Van Bokkelen says. "These biotechnology companies have recognized -- because it is a very capital intensive process -- that one strategy to help them achieve that goal is not just to raise money in the equity market but to license technology and create alliances with other biotech or mainstream pharmaceutical companies."

Van Bokkelen refers to the relationships the seven-year-old company has formed with Pfizer, Bristol-Myers Squibb and Medarex as strategic equity investments.

"It's called comparative advantage," he says. "Two parties strike up a relationship, and they each do what they do best and then share the proceeds ... it is a way to maximize the benefit."

Athersys provides the drug targets, which are a result of proprietary technology, and other companies take the technology from there, paying fees along the way of the drug's development cycle. Athersys benefits monetarily without making the capital investment in the development process.

Sounds simple enough -- the new biotech company making licensing fees off its technology -- but the first step, says Van Bokkelen, is getting in the door.

"The reality was we weren't doing deals with the big pharmaceuticals when we were in the incubator," says Van Bokkelen.

It wasn't until Athersys moved into its world-class facility that it got its foot in the door, and even then, it took on all the risk.

"The way that we managed to convince them was to work on a focused set of objections, says Van Bokkelen. "Then we bombarded them with scientific data and even said that in the initial stages we would assume all the risk."

Van Bokkelen has big plans for Athersys, and says licensing technology is going to become less relevant to the company's focus.

"It is a reflection of our strategy and capability. The company was never going to be about one product and one technology -- it is about a broad base," says Van Bokkelen. How to reach:Athersys Inc. (216)431-9900 or www.athersys.com