It’s hard to label something that happened 17 years ago as ancient history, but in the world of technology, specifically the Internet, something that happened 17 years ago is beyond ancient. It’s practically prehistoric.
Remember something called Ask Jeeves?
Before this other company called Google came around, Ask Jeeves was one of a few serious players in the arena of search engines where Yahoo!, AltaVista and Lycos competed.
Today, the company no longer answers to Jeeves. Instead, it has simply rebranded itself as Ask.com, and is working to differentiate itself in the world of search.
“Like other companies of our mintage or vintage, we were challenged by what was happening in search,” says Doug Leeds, who became CEO of Ask.com, a 220-employee company, in 2009. “With Lycos, Excite, AltaVista, and all the others that were at the beginning, Ask had a different approach at that time. We were about questions and answers more so than about searching per se.”
Headquartered in Oakland, Calif., Ask.com is a global service used by more than 100 million users. When Google came in and tore up the market with what turned out to be a much better product in algorithmic search, it was sort of an existential moment for Ask.com.
“What do we do about that?” Leeds says. “Other companies couldn’t compete and folded, but we never saw our traffic leave us. People still came to us. The question we asked at Ask was, ‘Why? Why is it that people continue to love our products and our services when other contemporaries were pushed aside by Google?’”
The answer was and still is the fact that Ask.com relies on a different user proposition.
“We say, ‘We can answer questions for you,’” Leeds says.
People felt very comfortable asking a question on Ask.com or Ask Jeeves, much more than they ever did on Google.
“What I said in 2009 was, ‘Let’s double-click on that experience,’” Leeds says. “Let’s figure out how we can explore providing more value to users when they ask questions … because that’s what’s keeping us in business.”
With many of the Internet companies born in the mid-’90s no longer around, Ask.com has not only survived, but is thriving in today’s world.
Here’s how Leeds is growing Ask.com to the next level.
Find a better way forward
Since Google first launched in 1998, Ask.com has been able to rack up some significant accomplishments. And Leeds, who originally joined Ask.com in 2006, was behind many of those great ideas as a member of the product management team.
“That wasn’t too long ago, but the world still hadn’t been as Googly then as it is now,” Leeds says. “We were doing some amazing things in our product at that time. Our former CEO and I got together and we said, ‘We can build a better search engine and a better interface to search than Google can.’”
Leeds and his team were confident that one of the reasons Lycos, Excite and others failed was because they weren’t listening to what the marketplace wanted. Even Google, they felt, could be better and improved upon.
“We poured investments into this,” he says. “I’m not just talking about back-end technology, but how you display search results and what features you give to people to consume them.”
In fact, much of what you see on Google today, things people take for granted as being Google or Bing products — like related searches or having a homepage that gets you engaged — actually started on Ask.com.
“Those were things that we invented and that we did first,” Leeds says. “Today, every search engine does that stuff, but back then it was cutting edge stuff that no one else was doing.”
Ask.com got a lot of great press at that time and was being called the Google killer. But what happened was Google copied those features Ask.com was offering its users.
“Anything that we were doing would show up pretty quickly on Google and people would say, ‘I like Google because of its related search,’ and we’re like, ‘Ahh, that started here! We did that!’” Leeds says. “People also say, ‘I like Google because you can preview a page by clicking on a button.’ That was us.
“But nobody ever said, ‘I like Google because it gave me a good answer to my question.’ Even though we’re building incredibly good products here and it’s keeping us around, and people love us and are impressed by us, the timeframe for which we can win any customer based on those innovations was relatively small because they could be copied.
“The timeframe for which we could win on innovating in Q&A was much longer because Google was not being used that way.”
Create next level innovation
Since Q&A was Ask.com’s bread and butter, Leeds went to work on innovations that would make that a more valuable experience for Ask.com users.
“We built a user community,” Leeds says. “Right now, we have 180 million users worldwide every month, but they weren’t answering questions for each other. It was just ask a question to Ask and hope that Ask gives you back an answer sourced from somewhere on the web. We said, ‘There must be a way to harness 180 million people to answer questions for each other.’ So we built a community and it’s been pretty successful.”
What was a transformative moment for Ask.com was realizing it shouldn’t be spending energy and resources on search technology, because Google and Microsoft were spending hundreds of millions of dollars a year toward search.
“We’re trying to keep up and we’re not as good at that and people only really want that when we fail,” he says. “Only when we can’t answer their question do they want the Web search results. Let’s focus on how to answer their question and let’s outsource our fail state to some other company who makes that their core business.”
That’s exactly what Ask.com did in 2009, and it transformed the company.
“It transformed our focus,” he says. “It transformed our marketing and the story we wanted to tell about why people should use us. It re-energized our company. Our business results have really taken off in the years since then because of the focus on what our users were coming to us for.
“That isn’t to say they weren’t happy with our old service, I think because Google changed the world we had to change our product and changing our product was getting back to what we were originally good at.”
If Ask.com wasn’t going to focus on search technology, but rather on Q&A, the company had to figure out what it was going to do to give users a good answer if it wasn’t going to be a series of links on a page.
“What we realized, and what our challenge is today, is that we have to create both the technology and the content with which that technology can draw on to provide great answers to people right away,” Leeds says.
“Whether that comes from another page, but you extract the right information from it, or whether you are aggregating information from a bunch of great content, or whether you actually present that content itself on the page, that is the challenge. Don’t just give them Web results. Give them great content that they can consume.”
The biggest challenge Ask.com has is building technology that can deliver that content in a scalable way, and it relies on some of the same things that search does.
“We’re rebuilding some of the things that we originally cut, but we’re building them four years later and things have changed,” he says. “It’s about understanding the actual semantics of what people are asking using statistical analysis to look at pages and finding out that different sentences in different engrams or different terms are showing up in the same relationship on this page as they do in other places on the web, and using that to extract information. That’s the technological approach.”
The other approach Ask.com is taking is actually acquiring great content and bringing it onto a page. In September 2012, Ask.com bought About.com.
“About.com represents a collection of authoritative articles on topics as wide-ranging as the Internet,” Leeds says. “When we looked at that site we said, ‘This is really high-quality content that answers many of those questions that people are asking on Ask.com. If we own the content experience, and we could work closely with the people who are creating that content, then we can answer more of our own user’s questions. That About.com model is one that we are going to replicate.’”
Besides About.com, Ask.com also owns Dictionary.com and Thesaurus.com. It also partners with sites such as Urbanspoon and Life123. The focus of the company in the future is to grow that portfolio.
“Whether that’s by buying companies that create the content themselves or by doing content partnering, all these things are the focus for the company — getting a great content experience on Ask.com, meaning an answer to your question both in brief and in full,” Leeds says.
“What About.com showed was doing that has benefits for both Ask users and About.com users and creates enough real synergies within the companies that the financial performance of both companies is significantly improved, especially About.com.”
Always be looking for what’s next
While the About.com acquisition will do wonders for both About.com users and Ask.com users, Leeds isn’t stopping there. The most exciting thing looking forward is the plan he has for the Ask.com product experience.
“We are going to significantly transform the way our product is brought to our users — what it looks like, how it works, the focus on Q&A and the experience on mobile devices,” Leeds says. “Across the board things are going to be changing in ways that users will really feel, which some will not like, but most hopefully will love, and really position ourselves as the place to go to get your questions answered on the web.”
One of the things Leeds says Ask.com has to improve is creating an environment where you go to an Ask.com page and if the logo were removed you would still know you’re on Ask.com.
“It should feel like a question and answer service without having to see the brand Ask.com,” he says. “There are a few sites that do that. At Ask.com, we’re still stuck a little bit in this evolution from search into Q&A, and what I’m most excited about is pushing forward into the Q&A experience so that you could cover up the logo on the page and you would say, ‘This is Ask.com because it’s all about Q&A.’”
The key to that innovation, Leeds says, is constant willingness to be uncomfortable.
“The thing about innovating is it’s really hard to do incrementally,” he says. “You can optimize or improve incrementally, but you can’t innovate incrementally, which means you have to do something completely different and feel uncomfortable.
“You have to do different exercises every day to make yourself feel OK with feeling uncomfortable to build muscle in innovation. That’s our big challenge every day. You have to transform uncomfortableness, a negative feeling, into silliness and acceptance, which is positive.”
How to reach: Ask.com, (510) 985-7400 or www.ask.com
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The Leeds File
Born: Los Angeles
Education: Received a bachelor’s degree from the University of California, Berkeley, and a doctorate from Georgetown University Law Center.
What was your first job and what did that experience teach you?
I worked at a stereo store called Affordable Portables. It only sold the Walkman. I started when I was 16 and worked there through high school and college. I learned about business, sales, listening to consumers and translating that into a product need.
Who do you admire in business?
Jeff Bezos. I’m such a fan of what Amazon.com does. They keep extending. It used to be just books, and then it became every product on the Web and off the Web. Then they bought Zappos.com and Audible.com, and introduced the Kindle. Bezos started the company and took it from nothing to where it is now, and all the challenges you have at each life stage of a company and having to manage through that is insanely impressive.
The other person is my grandfather. He was an inventor, and he invented the flexible straw, the bendy straw. He patented that and built the machines himself to start a company and for 17 years he ran the Flexible Straw Co. It was impressive to see that, and that it all started with tinkering.
What was the very first question asked on Ask.com was?
No one has ever asked me that, but that’s a really good question. I’ll have to find that out.
What is a question you have asked on Ask.com?
Every time I see a mock-up of a new product or feature we are going to roll out, people use the same question as the sample question — ‘How do I tie a bow tie?’
Health care expense tops the list of executive concerns in survey after survey, year after year. And it’s no wonder — just during the past decade, according to the California Healthcare Foundation, health spending per capita increased by nearly 75 percent.
But we can arrest and reverse this omnivorous trend. America will stop overpaying for health care when employers stop making payments to health insurers.
Think about it: American workers buy every imaginable good and service without the involvement of their employers — except one. The only major employee purchase brokered by the employer is the purchase of health insurance. Not coincidentally, health insurance is the only type of insurance for which costs are rising out of control.
There’s a simple prescription for arresting health care costs and gradually reducing them, without raising taxes or reducing tax revenues: change the tax code to allow Americans to deduct the entire amount they pay for health care and health care insurance from their taxable income.
Consider payment options
Years ago, my company, like many other employers, began offering our employees the option to either continue in our company’s health insurance plan or to take as extra salary the amount of the premium we were paying to cover them. The option made it plain that when employees used company-purchased health insurance, they did so using their own money.
Everyone appreciated having the choice; many took the extra cash. Indeed, it has been my experience that many employees are better positioned to buy their own health insurance than are the companies for which they work. Employees know their own needs and those of their family, and having control over potential savings gives them an effective incentive to shop carefully.
Why isn’t this already standard practice? The culprit is the tax code. Health insurance is the only item of significant value that Congress has decided may be provided to an employee tax-free. And therein begins the problem.
Assume an employer spends $6,000 a year to buy health insurance for an employee. If the employer gave the employee $6,000 to buy his or her own health insurance, they would be taxed on the income, conceivably leaving them with less than $4,000 to spend on care. In other words, the tax code has created a situation in which employees have a very sound reason to want their employer to act as their agent in the purchase of health insurance.
Disincentive comes into view
But in handing the responsibility to their employer, employees lose their opportunity and incentive to shop for their best insurance option. Instead of having 100 million employees in a highly competitive market for health insurance, as we do daily for every other kind of insurance, we have a much smaller number of employers who are forced by practical considerations to buy expensive, one-size-fits-all plans in a much less competitive market.
To be clear, I am not advocating that employers not be allowed to buy the health insurance for their employees. I’m suggesting we remove the huge tax-code-created disincentive for employees to buy their own. Without that disincentive, more employers could give their employees the option to either stay in the company plan or take cash — and more employees would opt for the latter, becoming comparison shoppers rather than passive participants in the health insurance marketplace.
When millions of Americans start shopping for their own health insurance, we’ll see more and more creative options being offered at lower prices. And American businesses will retire rising health care costs from the current No. 1 position on the list of business worries.
Jerry McLaughlin is CEO of Branders.com, the world’s largest and lowest-priced online promotional products company. He can be reached at JerryMcLaughlin@branders.com.
Say the word “innovation,” and immediately you think about business legends like Steve Jobs and Jeff Bezos, as well as the companies they created – Apple and Amazon. Too often, however, we focus on the people who have been tabbed as innovators and the companies that develop those breakthrough products, services and solutions, such as Apple’s iPod and iTunes, or Amazon’s marketplace and unique ecosystem.
True innovation goes much deeper than a single leader’s vision. It is an all-encompassing philosophy that permeates an organization and defines its purpose for being. For me, at least, I prefer to think about innovation in its broadest terms, extending its definition to include corporate cultures and innovative management styles. Think about how Facebook and Microsoft are run, and how at both organizations employees are a key factor in the idea creation, or ideation, process.
Now, think about the breakthrough products that eventually went bust. Hopefully, you don’t have a basement full of Beanie Babies, boxes of Silly Bandz, or a home library filled with laser discs. It is more common to land on a singular breakthrough product that temporarily revolutionizes your industry rather than develop a product through a process that’s repeatable or scalable. And, just as true, no matter how innovative and creative your management team’s style may be, without the proper processes in place to push ideas through a system that takes them from mind to market, you’ll eventually have trouble keeping the lights on.
It all comes down to developing a culture imbued with innovation at its core. But this also requires having a servant culture in place where every person who works for the organization thinks about the customer first.
Consider San Francisco-based Kimpton Hotels, where employees strive to create “Kimpton Moments” by going above and beyond with guests and delivering memorable experiences.
Kimpton overcomes the inherent limitations for creating new innovative products that being a boutique hotel chain includes by approaching innovation through its employee interaction – and then rewarding employees for their creativity. For example, when team members put in the extra hours to ensure world-class service delivery, the hotel chain has sent flowers and gift baskets to their loved ones. And when they create an innovative service experience, the company rewards staff members with such things as spa days, extra paid time off and other goodies.
And then there’s the Boston Consulting Group, a management consulting firm that’s known for developing innovative business processes and systems for its high-end clientele. Part of BCG’s internal process is a focus on team members maintaining a healthy work-life balance. When individuals are caught working too many long weeks, the company’s management team issues a “red zone report” to flag the overwork.
Talk about innovation! And no product, service or solution was developed, marketed or sold.
And finally, few organizations are more innovative than DreamWorks Animation. But beyond plugging out groundbreaking animated movies, the studio’s culture embraces empowerment and innovation. Employees are given stipends to personalize their workstations so that they create whatever inspirational atmosphere they need to succeed. And, as the story goes, after completing Madagascar 3, the crew presented a Banana Splats party, where artists showed the outtakes.
Not only are these three companies known for being innovative in their respective industry spaces, they also share the honor of being members of Fortune’s 2013 “Great Places to Work” list.
So how do you take the first steps toward transformation or put those initial building blocks in place to begin the journey? There’s no magic formula, but there are some common traits – and they revolve around empowerment and establishing a culture that cares.
- Are open-minded and ask “What if?”
- Teach team members how to see what is not there and identify opportunities in the marketplace to take advantage of those gaps.
- Develop cultures where innovation thrives through open and honest communication.
- Flatten the organizational structure and recognize that innovation can come from anyone and anywhere.
- Make innovation, itself, a cyclical and continuous process.
Stop and take an internal assessment of your organization, your team and of yourself. If you can’t check a box next to each of these five traits, stop and ask yourself why. Then begin your own journey to greatness.
Sir Tim Berners-Lee recalls a time when computer users around the world were quite nervous about the power of Netscape.
“A lot of people thought, ‘Oh, wow, a clingy and controlling Web company. What do we do about it?’” says Berners-Lee, director of the World Wide Web Consortium (W3C) and inventor of the World Wide Web. “Then they weren’t worried about Netscape anymore. They were worried about Microsoft, and they worried about Microsoft for a long time. Then they woke up one day and said, ‘Wait, the browser is not the issue. It’s the search engines.’”
Today, it’s the social network that has people worried, says Berners-Lee. But whichever medium is in society’s crosshairs, he says the fear is very similar in each case.
“When you have a monopoly, it slows innovation,” Berners-Lee says. “It reduces competition, and it’s generally not good for the market. One of the most important things about the Web is it being an open platform. The ’Net is a neutral medium. I can connect and you can connect, and we can talk. That is really important to an open market and democracy.”
One of Berners-Lee’s primary missions with the W3C is to ensure the Web is being used to its full potential. But it is also to make sure it remains an independent entity so that everyone who wants to has the opportunity to tap into that potential.
“If you can start tweaking what people say or you can start intercepting their communications, it’s very powerful,” Berners-Lee says. “It’s the sort of power that if you give it to a corrupt government, you can give them the ability to stay in power forever. It’s healthy for us to not put the Internet directly under the control of the government, but to have a set of multi-secular organizations at arm’s length from government acting responsibly and taking many views.”
Still plenty of room to grow
Berners-Lee helped launch the World Wide Web Foundation in 2009 to bring the power of the Web to more people.
“Maybe now 25 or 30 percent of the world uses the Web,” Berners-Lee says. “That’s still a massive gap and a massive number of languages where there still isn’t a lot on the Web. There’s a lot of culture that isn’t represented and a lot of countries where they haven’t the backbone for a good Internet base.”
The foundation has designed and produced the Web Index, the world’s first multi-dimensional measure of the world’s growth, utility and impact on people and nations. It covers 61 developed and developing countries, incorporating indicators that assess the political, economic and social impact of the Web in that country.
“The higher level of the Web Index is looking at impact,” Berners-Lee says. “Is it really affecting the way people do politics? Is it really affecting the way you do education? Is it affecting health?”
The recent turmoil in Egypt was a wake-up call to many who are connected to the Internet, but have started to take its power for granted.
“They thought the Internet was like the air, that it would always be there,” Berners-Lee says. “And people started asking the question, ‘Who could turn off my Internet?’”
Fortunately, there are countless efforts underway from those in the technology industry not to restrict access, but to take the Web to even greater heights.
“The art is designing it to work with all kinds of devices because different customer segments are going to use different devices in different countries,” Berners-Lee says. “If you’re designing something new on the Web, you need to make sure it works on all devices.”
How to reach: World Wide Web Consortium, www.w3.org
The greatest challenge of opportunity is said to be the ability to take the next step and understand what it will take to maximize that opportunity and achieve growth. Amy Rosen knows the importance of that comprehension.
“The skill set of an entrepreneur involves understanding how to create a business,” says Rosen, president and CEO for the Network for Teaching Entrepreneurship (NFTE).
Andres Cardona, who grew up in a rough neighborhood in Miami, is one of the best examples of this entrepreneurial spirit.
“He was on the verge of dropping out of school because his mom had lost her job, and he had to help contribute to the household,” Rosen says.
Fortunately, Cardona had become involved with NFTE. His natural leadership skills, along with the knowledge he was gaining from NFTE, empowered him to do something that would not only help his family, but also other youngsters in Miami.
Cardona founded the Elite Basketball Academy, an organization that would help kids hone both their basketball and leadership skills. He began with one kid and was making 70 cents an hour. Now, he’s a CEO with more than 150 kids, a staff of employees and he’s making money. He’s enrolled at Florida International University studying finance while he runs his business and supports his mom.
“I’m sure it will be the first of many businesses he runs,” Rosen says. “This is just a kid who needed to have his eyes opened to opportunity and learn some basics about business.”
A great place to start
The mission of NFTE is to work with young people from low-income communities, such as Cardona, and engage them in a different vision of opportunity and success.
“It’s basically an entrepreneurship class where they actually go through the whole business-creation process,” Rosen says. “At the end, which really gets to our mission, we want kids to actually connect school with opportunity so they stay in school. Kids start learning how to multiply fractions because they are figuring out their personal return on investments in their new company. We want them to start much earlier thinking about their future.”
Rosen points to Cardona as an example of a youngster with a great gift. But in too many cases, with too many young people, those gifts go unrealized and the child becomes an adult with nowhere to go.
“We want them to have a vision of success and whether they become entrepreneurs and create their own businesses or bring to their jobs and their employers an entrepreneurial mindset. That’s going to give them a much better chance at success,” Rosen says.
The work being done by NFTE fits like a glove with EY’s mission to drive entrepreneurialism in the business sector.
“Our cultures are so aligned around entrepreneurialism in general and we are all running competitions and promoting the notion that we need more entrepreneurs to solve problems,” Rosen says. “Now we have partners on every single one of our boards worldwide. They don’t have to be asked to do it. They really like doing it.”
Cardona was featured at the recent EY World Entrepreneur of the Year Award program in Monte Carlo. Other budding young leaders who have risen through NFTE also have been honored by EY.
“In every city where we have an operation, they feature our winning entrepreneurs,” Rosen says. “So the kids get an opportunity to network and see what success looks like and to go to the kinds of places they’ve never been and participate that way. And they get a sense of recognition for their work.”
Rosen says there’s nothing better than working with young people to prepare them for what lies ahead.
“If you’re going to give back, why not work with kids who need it the most and actually teach them and help them to be entrepreneurs,” Rosen says. “That’s what is going to grow our economy and create stability.”
How to reach: Network for Teaching Entrepreneurship, (212) 232-3333 or www.nfte.com
Although manufacturers can expect modest 2 percent growth through the remainder of 2013, the brief lull gives opportunistic executives a chance to prepare for an uptick in business next year.
Gus Faucher, senior economist for The PNC Financial Services Group, attributes his optimistic forecast to a rise in business investments, fueled by the resolution of murky tax and sequestration issues, and the continuation of record-low interest rates.
“I think the U.S. will maintain an edge in high value-add manufacturing because we have highly skilled, productive labor,” Faucher says. “Maintaining our competitive advantage requires ongoing development of our manufacturing workforce.”
As the economic recovery proceeds, in what areas will spending accelerate most? Manufacturers of home building products and materials, furnishings, appliances and so forth should have a strong 2014, thanks to the rebound in the residential real estate market. In turn, those manufacturers will purchase more production equipment, raw materials, parts and other items. The wealth effect in real estate will stimulate growth throughout the supply chain.
Will rising global demand for U.S. made products including semiconductors, medical devices and specialized materials manufacturing propel employment gains over the next few years? Post-recession hiring will wane next year as manufacturers look for productivity gains from workers added since employment levels bottomed out in early 2010. Although manufacturing is back up to 12 million workers, that’s still well below the 2006 peak of 14.2 million. The mantra continues to be: Do more with less.
How could the expansion of the shale oil industry affect manufacturing? Shale oil exploration and extraction will be a boon to ancillary industries and all U.S. manufacturers that rely on natural gas for production, since it will lower energy costs over the long-term. Moreover, it will give America a much-needed competitive advantage in today’s spirited global marketplace.
Augustine (Gus) Faucher is a senior economist for The PNC Financial Services Group. He is responsible for contributing to the preparation of PNC’s U.S. economic forecast and alternative economic scenarios.
The Rainforest: The Secret to Building the Next Silicon Valley
Victor W. Hwang and Greg Horowitt
Regenwald, 304 pages
What makes places like Silicon Valley tick? Can we replicate that magic in other places? How do you foster innovation in your own networks? Victor W. Hwang and Greg Horowitt propose a radical new theory to explain the nature of innovation ecosystems: human networks that generate extraordinary creativity and output. They argue that free market thinking fails to consider the impact of human nature on the innovation process.
These ecosystems, or Rainforests, can only thrive when certain cultural behaviors unlock human potential. The authors provide practical tools for readers to design, build and sustain new innovation ecosystems. The Rainforest challenges the basic assumptions that economists have held for over a century and will transform the way you think about technology, business and leadership.
The Coming Jobs War
Gallup Press, 220 pages
Drawing on 75 years of Gallup studies and his own perspective as the company’s chairman and CEO, Jim Clifton explains why jobs are the new global currency for leaders. To win, leaders need to compete. The business community needs to double the psychological engagement of workers so that it can compete with cheaper labor. Perhaps most importantly, leaders need to recognize universities, mentors and especially cities as a supercollider for job creation. There’s not a moment to waste: the war has already begun.
Innovation Nation: How America Is Losing Its Innovation Edge, Why It Matters, and What We Can Do to Get It Back
Free Press, 320 pages
John Kao first offers a stunning, troubling portrait of the recent erosion of U.S. competitiveness in innovation, then he takes readers on a fascinating tour of the leading innovation centers, such as those in Singapore, Denmark and Finland, which are trumping us in their more focused and creative approaches to fueling innovation. He then lays out a groundbreaking plan for a national innovation strategy that would empower the U.S. to marshal its vast resources of talent and infrastructure in ways that will produce transformative results.
While government regulations and prices for energy and raw materials influence manufacturing competitiveness, having a talented, innovative workforce was deemed the most critical factor in a country’s ability to compete in manufacturing, according to the 2013 Global Manufacturing Competitiveness Index by Deloitte.
Unfortunately, the U.S. is lagging behind other high-wage nations such as Germany and Japan when it comes to innovation in its manufacturing sector. And we’ll continue to lose ground if executives wait for colleges to churn out science, technology, engineering and mathematics graduates.
“We can’t wait for someone else to fix it. The talent issue needs to be addressed today,” says Jennifer McNelly, president of The Manufacturing Institute, a non-profit affiliate of the National Association of Manufacturers.
Experts may not agree about the existence of the so-called skills gap, but they unilaterally concur that manufacturing executives can jump-start innovation without breaking the bank by tapping into widely available brain trusts.
Collaboration is the secret sauce of innovation, John Zegers says. The director of the Georgia Center of Innovation for Manufacturing, Georgia Department of Economic Development, says creativity doesn’t evolve from one person — it comes from inviting different perspectives.
“Whether you’re trying to solve a problem on the manufacturing floor or develop a new product, it’s critically important to garner feedback from everyone who touches the product,” he says.
Historically, manufacturers have expected engineers to be their innovative spark plugs, but the notion of the lone innovator is fading amid the shortage of engineering talent. Today, 90 percent of managers view the manufacturing workforce as full partners in solving problems, improving processes and satisfying customers, according to the 2012 Manpower Manufacturing Workforce Survey.
Moreover, cross-functional teams comprised of accountants to shipping clerks are using their detail orientation and intimate knowledge of supply chain processes to streamline procedures and create new efficiencies.
“Involvement creates ownership and ownership inspires creativity since employees feel empowered to make changes,” Zegers says. “Plus, the cost of marshaling existing resources toward a problem is negligible.”
At the same time, garnering input from people in dissimilar roles broadens a team’s perspective and buoys critical thinking by injecting a dose of cultural and ethnic diversity. Of 321 companies surveyed by Forbes, 85 percent agreed or strongly agreed that diversity is key to driving innovation in the workplace.
While many organizations want the benefits of high-stakes innovation, their culture won’t support it. Executives who resist outside-the-box ideas or penalize failure may unconsciously stifle creativity. If you champion the efforts of cross-functional teams by removing the barriers to innovation and sponsoring a culture that shuns the status quo and rewards risk-taking, the seeds of creativity will sprout and bloom, but only under the right conditions.
Close skill gaps through training and education
Manufacturing executives frequently bemoan the dearth of workers capable of mastering today’s increasingly hi-tech, team-based roles, yet the answer to the problem could be right under their noses.
About 20 percent of all American jobs are now in the STEM fields, with half of those open to workers who don’t have a four-year college degree, according to a new analysis by the Brookings Institution, who refers to these workers as the second STEM economy. Second STEM workers come from high schools, community colleges and vocational schools and are critical to the implementation of new ideas since they advise researchers on feasibility of design options, cost estimates and other practical aspects of technological development.
Manufacturers bear some responsibility for their predicament according to Manpower, since most companies are not recruiting for manufacturing talent as if they were knowledge workers and are not managing them as a knowledge workforce either.
Specifically, they’re neither developing their current employees nor building a pipeline of technically proficient talent to meet near-term hiring needs.
“There are plenty of 40-year-olds working in the industry who were trained in a different way,” says Rick Jarman, president and CEO of The National Center for Manufacturing Sciences. “The talent is there, they just need retraining and development.”
Investing in daylong seminars that use simulation to teach lean manufacturing concepts, kaizen events, overall equipment effectiveness, value stream mapping and so forth can yield big dividends, Jarman says. Workers who understand modern manufacturing concepts may enhance a company’s penchant for innovation.
Plus, ingenuity is a teachable skill. Employees can learn the fundamentals of the innovation process and start generating money-saving, useful ideas after attending a short, four-hour training course. Plus, upgrading your current staff is less risky and time-consuming than developing novices.
Since manufacturing will see a 50 percent increase in the number of mature workers over the next decade, companies should consider this workforce segment as they assess their near-to-medium-term talent acquisition strategies. Innovative organizations are pairing mature workers with technically savvy new hires to facilitate knowledge transfer and mentoring.
Indeed, some industry veterans have the ability and desire to learn advanced technical skills like computer numerical control, machine tools, computer-aided design and manufacturing programs or even robotics, if given the chance. High-potentials are being offered tuition assistance because having a technically competent workforce is critical to innovation.
“Manufacturers can’t capitalize on groundbreaking technology or invest in computer-aided machinery if they don’t have someone to operate it,” McNelly says. “This is just one example of how the skills gap can impact innovation throughout an entire industry.”
Employers can close debilitating talent shortages in as little as three to six months by raising their expectations and requesting certified workers from local community colleges. McNelly cites a pilot program in Northeast Ohio as an example of successful educational alliance. Community colleges provide NAM-Endorsed certified training to students to prepare them for advanced manufacturing careers.
“Just showing up is no longer enough,” McNelly says. “Employers need certified employees to thrive in a manufacturing environment that’s grounded in teamwork.”
Enticing high school students is a long-term solution to looming talent shortages in manufacturing. To succeed, executives need to change students’ perception of the industry.
Offer them apprenticeships and invite students to tour plants so they can see that there’s more to a manufacturing career than standing on your feet all day, says McNelly.
“Show them a distinct career path and the technical aspects of the job, or else bright students with a flair for innovation will pursue opportunities in other industries,” she says.
Cross boundaries to expand your brain trust
Augmenting the creative efforts of a modest staff by crowdsourcing ideas and suggestions from customers and stakeholders is a new approach gaining attention. According to Newsweek, Unilever established an open innovation unit to work with outside partners in 2009, which increased the share of external ideas that are adopted by the company’s business units from 25 percent to 60 percent. Even Starbucks is asking stakeholders to help develop ideas to reduce waste.
While it’s possible to solicit ideas via social media and traditional focus groups, many companies are using online discussion boards to engage outsiders in stimulating conversations with executives and engineers. The back-and-forth banter encourages participation and helps flesh-out creative ideas in real time.
If a shortage of engineering expertise and technical know-how is stifling R&D, one technique is to borrow the requisite expertise by tapping the brain trust at your local college or university.
“Many colleges and universities will gladly provide research, access to labs, professors and engineering students to local manufacturers,” Zegers says. “They can help you develop cutting edge technology or solve problems without adding to staff. They can even help defray development costs by connecting manufacturers with grants or matching funds from state and local governments.”
Collaborative R&D is another way to leverage external expertise and technology in the quest to develop cutting edge products and efficient manufacturing processes.
“Manufacturers can reach the end game faster by pooling intellectual capital and sharing the investment and the return with partners who have complementary talents,” Jarman says.
If you don’t have the wherewithal to source partners and manage large-scale projects, you can still enjoy the benefits of collaborative R&D, by engaging an intermediary.
The National Center for Manufacturing Sciences provides neutral, third-party collaborative project oversight. Or, seek out industry programs that form strong multi-disciplinary teams by matching willing partners with experts from universities, government labs and external funding sources. Collaborating with engineers from the U.S. Department of Commerce’s Manufacturing Extension Partnership or other public/private partnerships is yet another option.
The opportunities to innovate are endless, even for small manufacturers, if executives go out of their way to broaden their talent circles.
“There are more than 300,000 manufacturers in the U.S. and endless opportunities to collaborate,” Jarman says. “Some of the most creative ideas are coming from small and mid-size manufacturers who have crossed boundaries and barriers to pursue talent-driven innovation.”
How to reach: National Association of Manufacturers, www.nam.org; The National Center for Manufacturing Sciences, www.ncms.org; The Georgia Center of Innovation for Manufacturing, manufacturing.georgiainnovation.org
Back in 2005, Hamdi Ulukaya stumbled upon a classified ad for a yogurt plant recently closed down by Kraft. After initially ignoring the ad, Ulukaya had a gut feeling that he should at least visit the plant.
It’s a good thing he listened to his gut. Otherwise the story of his company, Chobani Inc., may be very different today. After seeing the plant Kraft had for sale, Ulukaya bought it on the spot and went to work perfecting the recipe for Chobani Greek yogurt based on his belief that everyone, regardless of income or location, deserved access to delicious, high-quality yogurt.
“I grew up with yogurt,” says Ulukaya, who is founder and CEO of the New Berlin, N.Y.-based company. “Being from Turkey, a big part of our diet was yogurt.”
It wasn’t just a gut feeling that made Ulukaya visit the plant, but it was also a gut feeling that Chobani would make it in the world of yogurt in retail.
“I didn’t analyze it too much,” he says. “It was nothing but a gut feeling. Everyone I knew that had a knowledge of business were looking at the category and at who was closing a plant, which was Kraft. Everyone who looked at the idea was against it.
“I would be convinced for a day by the people I talked to and then the next day I’d change my mind. The only thing I knew was there was a big opportunity in yogurt.”
Here’s how Ulukaya built a yogurt empire that has gone head-to-head with category veterans Dannon and Yoplait.
Keep the faith
Chobani began with the hiring of five employees. However, the initial employees, including Ulukaya himself, lacked the experience in launching a yogurt company.
“I built the company based on people, not with experience from before, but willing to learn and try anything,” he says. “We had a bunch of people that had never done this before. None of us had run companies. None of us had worked in high levels of companies. None of us were from Fortune 500s.
“Whatever you look for in people to bring them into a company — none of us had it. Most of the people came in from an entry-level position and now they’re leading departments. Chobani not only became a business that grew, but Chobani was like a school to us, including myself.”
With that mentality Chobani’s first yogurt hit shelves 18 months after Ulukaya bought the Kraft plant, and has since grown to become America’s No. 1 yogurt.
“It was not easy, but what we found out was what is seen and what is reality are two different things,” Ulukaya says. “The category was owned by two major companies. Dannon and Yopliat owned about 70 percent of the market, and they had been there for years. As a startup, you go to the specialty stores first. That’s how you start and you grow and once you reach a certain level then you go to the big retailers.”
Ulukaya didn’t want to do that. He wanted to go to the big retailers first and be in the regular dairy isle.
“That was a crazy idea and nobody thought that would go, but at least we tried,” he says.
“When we tried, we convinced one retailer in New York, ShopRite. The result from that was we were able to expand to a couple of other retailers. After the second or third customer that we had success with for our yogurt I knew it wasn’t going to be about selling — it was about making enough. So from that moment on I lived in the plant.”
Chobani has grown from five employees to almost 2,000 today. The company started out with one truckload of milk a day and now uses more than 4 million pounds daily. Its products are now available nationwide as well as in Australia, the UK and Canada.
Build a culture that breeds passion
Chobani’s success has been driven by Ulukaya’s passion, which earned him the title of EY Entrepreneur Of The Year 2012 U.S., and subsequently, the 2013 World Entrepreneur Of The Year. That success has also been a result of Chobani’s culture of delivering the highest quality.
“We have a reason for doing what we are doing,” Ulukaya says. “We want to make an awesome product for everybody. We want to make it nutritious, delicious and accessible. While we are making it, we want to build things around it. We want to be a part of the community. We want to be places where we can make a difference. That gives people reasons to get together and do something awesome.”
As Chobani has expanded and its core team has grown-up, it’s been important to transfer that culture and belief to everyone else.
“That passion was so strong, and I think we are so connected to our business. I am personally so involved in the business, especially in the plants, that having those one-on-one conversations and being an example, not just preaching and putting things on the wall, but by living it and putting in hard work, affects us more,” he says. “We built Chobani on those qualities.”
Chobani has gone from nothing to $1 billion in five years. That kind of growth can be stressful, but Ulukaya enjoys what he does and that’s what pushes him forward.
“It has its highs and lows, because let’s face it, it’s not easy,” he says. “They asked Steve Jobs what was the most important thing in business and he said, ‘Passion.’ If you don’t have passion you would give up when things get difficult. We have so much passion and love for what we do that it becomes a part of our life. I personally don’t separate my personal life from my business, because I’m doing something that I love.”
Ulukaya calls that passion “The Chobani Way.” He doesn’t expect any of his employees to have to pretend they enjoy what they’re doing or act differently than who they are.
“I have never become different depending on whether I was involved in business or in my personal life,” he says. “You don’t have to pretend to smile. You come as you are and you just try to learn it. That became ‘The Chobani Way.’”
How to reach: Chobani Inc., (877) 847-6181 or www.chobani.com
If you are an entrepreneur, and you see what you think is a growth opportunity, you may be tempted to take the advice that’s been offered many times: risk all you can and jump in head first.
But if you catch your breath, the proper decision at that time is not really what to do. Your analysis lies more with if you think the opportunity is one for growth.
With that in mind, Smart Business interviewed some of the world’s greatest entrepreneurs and the leadership at EY about growth opportunities. These business leaders come from the more than 60 countries at the recent EY World Entrepreneur Of The Year conference in Monte Carlo.
“We’re looking at China and other Asian countries. The key to that market is to have big internationals that are creating value for their communities where we can sell our products. These are the kind of countries, those that can generate big internationals, that we are looking at.”
Martin Migoya, CEO, Globant
Entrepreneur Of The Year 2012 Argentina
“I have been tracking where I see money going. Where is the most foreign direct investment happening? Africa is clearly one. In South America, Colombia has been coming much more into its own, as have Indonesia and parts of Southeast Asia. Those are some of the markets you’ll start to see. Mexico is another one you have to watch because it’s close to the U.S. and its leaders have had change in their political landscape to be more pro-business.”
Herb Engert, Americas Strategic Growth Markets Leader, EY
“One of the ways that we encourage innovation is we partner with a lot of technology startup companies. We look for alliances and what’s next in technology that can drive improvements and enhancements in our industry.
When we see a technology that’s promising we’ll start working with them and provide them with real-world market feedback. That gives us the data and confidence to help them get to commercial deployment.
Our people are always looking for innovative ways to do things with the discipline of knowing that at Chevron we have to represent our brand and stand behind everything that we do and our customers expect us to keep them on that proven level of technology.”
Jim Davis, President, Chevron Energy Solutions
“I am in one of the newest economic blocs to emerge from Latin America, the Pacific Alliance, which seeks to create a Latin American gateway to Asian markets. Chile, Colombia, Mexico and Peru are members. The bloc hopes to make the commercial, economic and political forces among the members work more closely together.
The entrepreneurs representing Colombia chose me to be in that alliance two years after it was founded. What it is going to do is to join the market of those five countries — it is one market for everyone.”
Mario Hernandez, founder and president, Marroquinera
Entrepreneur Of The Year 2012 Colombia
“There continue to be tremendous opportunities in Brazil; it’s a big country, a big market. It will be back on the world stage even more with the 2014 World Cup and ultimately the Summer Olympics in 2016.
But when you look at Spanish-speaking countries, certainly Mexico is attracting a lot of direct foreign investment. The new administration, the federal government there, has definitely got a strong commitment to entrepreneurship.
We are seeing that as being important to them, and we are working with them on a number of different initiatives as the U.S. State Department and others try to help foster more entrepreneurial startups and more entrepreneurial growth in Mexico, both big and small.”
Bryan Pearce, Americas Director, Entrepreneur Of The Year and Venture Capital Advisory Group, EY
“There are always things you can do to improve and grow your business. You should be rethinking and retooling it every chance you get. The key thing is making sure everybody in the organization understands the story, where you’re going, are you going to get there in the belief that you are doing the right thing. People want to know their purpose, so that’s for me the biggest area to keep the energy going — keep a sense of purpose very strong.”
Dr. Alan Ulsifer, CEO, president and chair, FYidoctors
Entrepreneur Of The Year 2012 Canada
“Always be seeking new opportunity. Always be looking for new technologies, innovation and creativity within your people. The best ideas within our business have come from the people inside our company. You have to give opportunity to your people. Tell them it’s OK to be wrong and make mistakes. That’s important so people will learn from those mistakes and come up with better ideas.”
Lorenzo Barrera Segovia, founder and CEO, Banco BASE
Entrepreneur Of The Year 2012 Mexico
“The growth driver in the world is coming from entrepreneurs. They are the ones driving economic growth and driving job growth. If you look at leading indices of companies, they churn much more rapidly than they ever did before.
“It used to take 20 years to have a half of a churn in some of these indices. Now it takes four or five years. It’s because the entrepreneurs are building businesses so quickly. We have to keep investing and keep recognizing their strengths.”
Jim Turley, retired global chairman and CEO, EY
“It’s important to understand where the trends are going. So communication and information is important. I fully support the free market system. It’s a great way to understand where the best new ideas are coming from and where the value lies. We keep an eye on our competitors on technology and on alternative learning aspects. So to the extent that the web provides a better way to educate more students more efficiently, we’ll be using that.”
J.C. Huizenga, founder, National Heritage Academies
“I built the company based on people, not with experience from before, but willing to learn and try anything. We had a bunch of people that had never done this before. None of us had run companies. None of us had worked in high levels of companies. None of us were from Fortune 500s.
“Whatever you look for in people to bring them into a company — none of us had it. Most of the people came in from an entry-level position and now they’re leading departments. Chobani not only became a business that grew, but Chobani was like a school to us, including myself.”
Hamdi Ulukaya, founder, president and CEO, Chobani Inc.
Entrepreneur Of The Year 2012 United States and 2013 World Entrepreneur Of The Year
“Companies attracted by the Latin American market have to decide where to establish the operations in Latin America. They have many opportunities: Sao Paulo; Buenos Aires; Santiago, Chile; or maybe in Peru. But in Uruguay, there is a very small market. You have to operate with a different concept, much like an offshore company, to operate in Latin America.”
Orlando Dovat, founder and CEO, Zonamerica
Entrepreneur Of The Year 2012 Uruguay