SBN Staff

Executive compensation is something stockholders really don’t care about when a company is profitable and stock values are going up and paying dividends. And right now, the Dow Jones Industrial Average is seesawing around a record high 16,000 mark. But there are times when people do wonder what’s going on. Last year, Bloomberg Businessweek compared executive compensation to the average workers’ pay.

The highest ratio was at the 
J.C. Penney Co., where the CEO’s annual compensation was $53 million. His workers’ pay, on average, was $29,700 — a ratio of 1,795-to-1. He was fired shortly thereafter because he had spent too much money on marketing and made too many changes. The company was improving and doing well; his compensation wasn’t what cost him his job.
 
“Of course, when things are going downhill, boards of directors start looking at trustworthiness, ethics, accountability and performance,” says Robert Bjorklund,
Ph.D., a professor in the Management Department of the School of Business at Woodbury University.
 
Smart Business spoke with Bjorklund, who is studying CEO compensation issues in top American corporations, about executive pay.
 
What message does sky-high executive compensation send to employees?
 
Do most workers care how much money Oracle Corp. CEO Larry Ellison makes? Not really.

What workers care about is internal 
equity; how their pay compares to other workers. If the person who’s sitting in the next office, doing the same thing, is making 20 percent more, that’s upsetting. But as far as the CEO, who is levels above rank-and-file workers, as long as he or she is making the company work, employees don’t really care. Employees have a stake, if not a say, in executive compensation, but they really have a stake in executive performance.
 
Should pegging compensation directly to performance be a given?
 
Many question whether CEOs should get a bonus when company performance is subpar. And that’s when you have to come to grips with the definition of performance. What makes a company successful? Must it involve something that has long-term impact? If you’re keeping a scorecard on where the company is going after the CEO departs, has the company been ramping up for the future? If so, that’s a good thing. But if the executive is getting paid for driving the stock price up, that can be disastrous. Assuming a CEO is paid in part by stock options, that means he or she is doing whatever he or she can to drive up that
price. That might put the company in more debt to increase an equity ratio of some sort. But if the stock rises and the CEO cashes out, that may not be good for the company, long term.

It would be better if we could find a way to normalize the value of a company — not in terms of what its cap rate is right now, but where its cap rate is going and the contributions the company is making.

What has been the effect of corporate governance mandates like Sarbanes-Oxley and Dodd-Frank?
 
Dodd-Frank hasn’t been all that effective. It certainly hasn’t changed executive compensation policies. There is an issue of scarcity, of course. There are only so many people qualified to run a Fortune 1,000 company, which drives up their value. For CEOs whose companies are doing well, the board’s personnel or executive committee is apt to think, ‘Our CEO is making only $30 million. Let’s give that person anything he or she wants to stay, because we like the job he or she is doing.’ That also applies when the CEO has no intention of leaving but wants a sweeter deal.

Is CEO compensation out of control? Certainly, if the issue is that there’s no overarching system to govern executive pay. But in the long run, the law of supply
and demand applies. If somebody’s doing a poor job, that person won’t last. It’s also likely that the next person will receive more money than his or her predecessor. Non-board members don’t feel they’re empowered to change the situation. They tend to look the other way — as long as the company is delivering a good product or service at a reasonable price, which is what everyone wants.
 
Robert Bjorklund, Ph.D., is a Professor with the Management Department in the School of Business at Woodbury University. Reach him at (818) 252-5262 or robert.bjorklund@woodbury.edu  
 
Insights Executive Education is brought to you by Woodbury University.

Four years ago, David Lopez found his calling. A striving Fort Lauderdale entrepreneur, Lopez came across a unique opportunity: a mobile dental equipment repair company. With a strong background in franchising, Lopez, who was looking for a recession-proof business model that could offer a high return on investment, knew he had found what he had been looking for and couldn’t pass it up.

So he bought a van with his friend and partner, Mike Parker. They equipped it with tools and inventory and started to approach dentists’ offices to offer on-site handpiece repair, equipment service and sales. Two years later, Dental Fix Rx was born.

Since its creation, Dental Fix’s mission has been to revolutionize the dental service industry by delivering high-quality and immediate service at a competitive price, through a dedicated mobile network of highly trained and successful franchise professionals.

The company soon gained recognition by providing a much-needed solution to dentists in an innovative way. Dental Fix removed the need for doctors to ship their handpieces to repair centers, eliminating their frustration and the four-week wait period to get them back, as well as saving them money.

Today, Davie-based Dental Fix has more than 100 franchises, a presence in more than 70 territories and serves more than 7,500 dentists in North America.

“From the beginning, I saw the many benefits of this business,” Lopez says. “Dental Fix’s startup costs were low and offered an easy-to-operate platform. Also, I did not have to worry about inventory cost fluctuations and minimum-wage employees. The best part was the return on investment. There are not too many businesses out there where you can bill $175 an hour to customers after a six-week training program.”

“I knew Dental Fix was going to be a game changer in the industry,” says Parker, also a van operator. “As an independent van operator, it was very difficult to compete against the big companies, since I did not have easy access to parts or equipment. It was also very costly for me to employ personnel to handle the calls and manage the schedule. With Dental Fix, I save at least $3,000 a month. As an owner, this is a huge benefit.”

Because Dental Fix provides a need-based service, the business was able to survive the economic recession. After all, no matter how bad the economy is, people will always need to go to the dentist and dentists’ equipment will always need to be repaired.

Lopez realized Dental Fix’s untapped business potential early on in the game, and began to strategize a growth plan. He was determined to enter the franchise arena.

Building a franchise takes a plan

“Building a franchise is about building a scalable system,” noted Lopez. “Before setting course, I needed to understand the type of systems we needed in place in order to successfully scale it.”

Lopez began to dissect the business carefully. For more than six months, he documented all the processes of the business. He also launched a second van with his brother-in-law, which served as the perfect test lab by addressing challenges and grasping what worked best.

The business, however, was still far from ready. Lopez’s biggest concern — and one he needed to address promptly — was the establishment of a competent training program.
With no competition in the market, he had to design the program from scratch. He set up a training facility, arranged sessions with repair technicians and videotaped them fixing the equipment. These recording sessions enabled him to create a complete training program with videos and hands-on training.

Even though the company was selling franchises, Dental Fix operated with negative cash flow for the first two years. The company’s focus was on putting the necessary systems and processes in place.

“We knew we were sitting on a huge opportunity, but we needed to first take the time to develop the right infrastructure,” says Lopez. “We were fine with the fact that we were operating at a loss the first two years because we had a clear plan.”

Despite the risky strategy, Lopez was able to bring Dental Fix to the development stage he desired. Currently, the company features a state-of-the-art training center and provides an extensive six-week training program that successfully prepares franchisees to repair, maintain and rebuild equipment.

The company also offers a strong support system through account management services, a technical support hotline, periodic visits to individual markets and proven marketing strategies.

Establish the appropriate company culture

Even though Dental Fix serves the dental industry, its clients are the franchisees, not the dentists. Lopez’s “our customer comes first” motto is ingrained into the company’s culture. A sign above his office door serves as a friendly reminder to all employees and newcomers: “Our franchise owner’s interests come first. If they succeed, our success will follow.”  

The company’s corporate staff, as well as the franchise owners, comes from very diverse backgrounds, but none have previous experience in the dental service industry. It is not allowed if you want to be part of the Dental Fix organization.   

“The reason is simple,” Lopez says. “Often, experience comes with bad habits. Dental Fix is an organization that is innovating the dental service industry. We adequately train all corporate staff and franchise owners with our values and systems. We are not a dental company. We are a franchise company, whose franchisees happen to be in the dental business. We want a culture that puts our customers first and thinks outside the box.”

Bumps along the road make a business stronger

Like in all great stories, the path to success is never easy. In the second year of operation, Dental Fix had to go through litigation after suing a former franchisee, who used to own and operate seven territories, for trying to copy its business model. After seven months of litigation and loosing almost 30 percent of its territories overnight, Dental Fix won the case.

This was an important lesson for Lopez, who has become very selective when it comes to granting franchises.  

“As an entrepreneur, you will make many mistakes. The important thing is that when you make a mistake, you learn from it and do not do it again. Now, we only sell franchises to owner operators,” Lopez says.

Dental Fix’s future looks bright. The company is undergoing an aggressive expansion plan, calling for 500 mobile centers in the next five years throughout the United States and Canada.  

“We have come a long way,” Lopez says. “The initial two years we focused on developing a solid infrastructure. Now, we are focusing on recruiting the right franchise partners, including do-it-yourselfers and military veterans. We are building an incredible organization. I can confidently say that there is no service franchise that provides a better return on investment than Dental Fix Rx.”

How to reach: Dental Fix Rx, (800) 586-0340, www.dentalfixrx.com.

Learn more about Dental Fix Rx at:

Facebook: www.facebook.com/dental.f.rx

 

As technology continues to make the world seem smaller, more U.S.-based companies are looking overseas for untapped opportunities. International expansion has traditionally been undertaken primarily by large, multi-national companies. Today, small, private companies are increasingly venturing outside the U.S. But seeking overseas opportunities comes with a different rulebook. What are the hazards and pitfalls that companies may encounter when expanding internationally?

Smart Business spoke with Greg Brown, tax partner at Sensiba San Filippo LLP, to discuss why more businesses are considering overseas expansion and what they need to know before investing in international markets.

Why are more and more companies looking overseas for opportunity?

In recent years, we’ve seen locally based companies looking into international expansion for two primary reasons: increased sales opportunities and access to new talent pools. Consumer markets are expanding across the globe, while Bay Area technology companies are increasingly looking to India, the U.K. and Asia for specialized talent. In both cases, in order to increase their probability of success, company decision-makers need to educate themselves or partner with those who know about the geographies they are entering.

What’s the first thing a company should do prior to opening a foreign operation?  

Most businesses considering foreign expansion already have a good idea where they want to go and why they are going there, but their certainty isn’t always the result of thorough planning. It is not unusual for a business to make a snap decision about entering into a contract with a foreign customer or to hire a talented foreign employee without doing its homework. While the business decision may make sense, the company may not know the operational or cultural challenges and the tax implications of the decision.

Companies venturing out should use qualified advisers who have local connections and experience in the country where they are considering doing business. These advisers can navigate through the applicable laws and provide valuable advisory services to the stateside leaders. Many law and accounting firms have international resources and can often connect their clients with these advisers through global professional affiliations.

How can culture affect the outcome of an overseas venture?

Cultural differences are often overlooked during international expansion. Without prior experience in a specific location or the luxury of a local partner, it’s easy to miss cultural differences that could significantly impact the success of a venture. An understanding of proper manners and etiquette are important and should be valued. A local adviser or business partner can help you understand cultural differences ahead of time and potentially avoid embarrassing faux pas.

How important are the tax ramifications of international business?

The tax ramifications of operating in a foreign country are an important aspect of the overall business decision. Businesses should consider what level of activity would cause them to come under the laws of another country, and what they’ll need to do to ensure compliance. Even having a few employees in a foreign country may require the company to file tax returns and possibly pay tax. Establishing a subsidiary comes with additional requirements, such as transfer pricing agreements.  

Moving existing employees to another country or having them work overseas will more than likely require them to pay foreign and U.S. taxes. It is normal for companies to enter into agreements with these employees in order to equalize the financial tax burden and benefits that result from overseas employment.

Any other advice you want to share?

Have a clear vision of what you want to do, educate yourself and your team, and use competent legal, tax and business advisers. Start by talking with your lawyer and accountant. Many professional advisory firms have experience in foreign operations and very useful contacts in other countries that can help ensure that your venture has the greatest possibility for success.

Greg Brown, CPA, MST, is a tax partner at Sensiba San Filippo LLP. Reach him at (408) 286-7780 or gbrown@ssfllp.com.

Insights Accounting is brought to you by Sensiba San Filippo LLP

The increased use of web-based cloud accounting applications has provided users many advantages related to efficiencies and cost savings but conversely it adds certain risk factors, says Roman Leshak, a director in Audit & Accounting at Kreischer Miller.

Smart Business spoke with Leshak about ways to reduce risks associated with accounting in the cloud.

How do accounting firms use the cloud?

Accounting applications utilized through cloud computing include bill management and payment, customer relationship management, document management, enterprise resource planning systems, financial statements preparation, payroll, sales and use tax, tax return preparation and work flow resources.

Advances in technology have helped expedite the use of cloud applications, as many companies are seeing significant cost savings compared to developing and maintaining these applications internally.

Cloud computing can be a very attractive option for saving costs; it also lends itself to quicker software implementation and updates, portability of data enabling remote access among multiple users and locations and significant reduction and possible elimination of capital outlays for hardware.      

What are the main risks involved with web-based accounting?

Despite the advantages of cloud computing, there are several risks that need to be considered and addressed prior to making the decision to move from the traditional accounting applications as information maintained within these applications is often confidential, or even entrepreneurial, and is very valuable to the user. These risks include security and data privacy, reliability and availability of the data and data processing, loss of integrity and overall data ownership and transfer of data.  

During the vendor selection process the user should verify that the service provider utilizes a data center and that the vendor has received an AICPA Service Organization Controls Report on those controls in place at the data center related to infrastructure, software, personnel, procedures and data. These reports are crucial to understanding the vendor’s oversight of the data management, internal controls and risk management and in verifying that the proper safeguards are in place. Some accounting firms provide assurance services related to cloud strategy, integration and migration and will assist with corporate governance issues, vendor selection and system integration.   

Security of the data transmitted and stored within the cloud is of the utmost importance as this data is no longer stored on local servers. Data should be encrypted during the transfer and storage stages and needs to be protected from access by other users that may be using the shared data center.  Availability of the data and the reliability of cloud applications are just as important as the security of the data. Vendors must limit unscheduled downtime of cloud applications in our global 24/7 business environment.

In addition, the number of applications that a company houses in the cloud environment increases the requirement for the bandwidth needed for uninterrupted access to that data. Companies have used secondary internet providers as a backup option as well as engaged services with both telephone and cable internet providers to ensure constant and reliable connectivity.  Risks related to the ownership and migration of data upon a change or termination in service providers also need to be considered.  It is important to discuss the data transfer procedures with potential vendors as well as exit costs and strategies.

What do businesses need to do before proceeding with accounting in the cloud?

The most important thing you can do as a protector of information is to understand the potential risks associated with accounting within the cloud environment. Users should consider establishing a process of mandatory contractual agreements with potential cloud application service providers and verification that the service provider has the proper controls in place to help mitigate these risks of accounting in the cloud environment.

Accounting in the cloud has many advantages, but considering the risks and protecting your data should be your focus when entering into this environment.

Roman Leshak is a director in Audit & Accounting at Kreischer Miller. Reach him at (215) 441-4600 or rleshak@kmco.com.

Insights Accounting & Consulting is brought to you by Kreischer Miller

 

Developing and retaining talent is one of the most pressing challenges for middle-market companies. Estimates suggest that comprehensive training programs are the second most costly human resource initiative, costing U.S. companies $150 billion in 2012. A key problem for midsize firms with limited resources is how to advance employees quickly and efficiently when development programs appear to require a sizable time and money investment.

“In today’s complex, dynamic and fast-paced work environment, where most learning is occurring informally, traditional formal training and development initiatives alone are insufficient for developing employees,” says Alison M. Dachner, assistant professor of management in the Department of Management, Marketing and Logistics in the Boler School of Business at John Carroll University.

Employees are expected to be resourceful and creative when finding information and problem solving on their own. To successfully maximize human capital development, organizations must leverage informal, self-guided development behaviors with formal training and development initiatives.

“The informality of these practices rebukes the need for an expensive learning and development infrastructure, and instead places more attention on managers’ ability to create a supportive work environment,” she says.

Smart Business spoke with Dachner to learn more about self-guided development (SGD) and its affect on talent management.

What is SGD and why is it important?

SGD refers to proactive employee behaviors that are developmental in nature, such as the decision to voluntarily engage in self-identified development experiences. More specifically, SGD represents an actionable set of knowledge-, skill- or relationship-building activities that improve human capital, but are unstructured, voluntary and not operationally or administratively provided by the organization.

SGD can be carried out during work time or non-work time. Some examples include asking for feedback, reflecting on one’s strengths and weaknesses, taking on challenging tasks, watching a webinar and networking with influential people in the organization.

What SGD behaviors do employees engage in the most?

Employees tend to find information, learn and develop skills relevant to work the most from relationships and reflection. Employees most frequently depend on their colleagues and supervisors when they need answers to work-related questions. More specifically, the three behaviors that are used to the greatest extent when employees need to find information, learn and develop skills are:

  • Collaborating with coworkers.

  • Interacting with a supervisor.

  • Talking with others. 

Employees also frequently develop themselves internally through introspection by reflecting on their strengths and weaknesses, and considering ways to improve their work. This learning is retrospective and is likely focused on analyzing critical incidents or salient workplace events judged by the employee to require development.

How can organizations facilitate employee engagement in SGD?

Organizations can influence employee involvement in these proactive development behaviors by hiring the right people and promoting the right conditions for SGD.

First, hire and cultivate employees who are proactive, motivated, curious, social and dedicated. Employees should be primed to seize the initiative, eager to volunteer for fresh projects and try on new roles, and willing to accept responsibility for their own advancement. They should be naturally curious and should be comfortable around other people.

Second, acknowledge SGD behaviors as part of the job. Organizations can design work roles that are supportive of SGD by providing employees the opportunity to try different methods for conducting work and to learn from experimentation. Further, employees should be encouraged not just to seek help and advice but also to provide it.

Third, maximize interaction. The adoption of self-managing teams, open workspaces and cross-functional training can create fertile ground for interaction in many organizations. Companies should give teams autonomy to solicit resources and expertise from around the organization. Companies should also build into the workday more opportunities for employees to network with one another. Even giving people a few minutes to converse before rushing back to their desks after the weekly all-hands meeting can help.

Fourth, make time for reflection. To facilitate the use of more introspective SGD, organizations can encourage employees to reflect on their accomplishments, career direction, strengths and weaknesses, and performance. Companies may even consider using goal-setting initiatives as a way to encourage personal reflection as a method of proactive development. 

Alison M. Dachner is an assistant professor of management in the Department of Management, Marketing and Logistics in the Boler School of Business at John Carroll University. Reach her at adachner@jcu.edu.

Insights Executive Education is brought to you by John Carroll University

The Patient Protection and Affordable Care Act, often called the Affordable Care Act represents some of the most far-reaching government overhaul of the U.S. healthcare system since 1965 when Medicare and Medicaid came into being. It will be phased in over time, but a number of changes have been delayed and won’t be in effect until 2015.

The act focuses on increasing the rate of health insurance coverage for American and reducing health care costs. Here’s what some area businesses have on their minds about health care reform as the time nears for the full impact of the ACA: 

Loren Shook
Chairman, president and CEO
Silverado 

How is your company preparing for changes associated with health care reform? 

Silverado has been preparing for health care reform since its inception and will be ready to offer the appropriate plan when the law becomes effective.

 Have to studied or instituted wellness programs to contain health care costs for your employees? 

Silverado has been implementing wellness initiatives over many years because we believe that healthy behaviors add years to your life and make for happier associates. Our associates are involved in daily exercise programs at work, as well as weight-loss programs, smoking cessation programs, healthy cooking contests, etc. We make it fun to get involved and reward healthy behaviors with Healthy Stars. These Healthy Stars can be redeemed in an online catalog for prizes such as electronics, luggage, jewelry, etc. We also offer discounted medical premiums to associates who complete biometrics, a health care assessment and who are non-smokers. 

What other things are you doing specifically to contain health care costs for your employees? 

Education is key in health care cost containment; for example, shopping for the best price for an MRI when it’s not an emergency situation is a way for the associate and the employer to contain costs. Another high-cost item is going to the emergency room when it’s not an emergency; identify where your local urgent care is located and use that in off hours for minor issues. And we really stress getting all your preventive care taken care of yearly — that’s a big one — be aware of whether you have high blood pressure and modify your lifestyle and/or take the appropriate medication. It’s really common sense, don’t spend money you don’t have to spend, whether it’s your money or the company’s money and proactively take care of yourself.  

Do you foresee having employees pay a larger share of company-offered health care coverage? 

We have a partnership with our associates. As costs rise, so do the costs to the employer and employee. Silverado absorbs the bigger share, but associates must also pay their fair share and understand how their lifestyle and consumer choices affect the cost of healthcare.

One of the questions our employees ask is, ‘Are we going to cut people back to part time?’ No, we will not reduce the hours of our associates. We value the services of full-time associates who are passionate and trained to serve our vulnerable populations whether it is serving people in their home, in our memory care communities or in their home on hospice care at the end of life. We will continue to maximize the number of full-time staff possible.

Dave Michelson
President and CEO
National Interstate

How is your company preparing for changes associated with health care reform? 

National Interstate typically reviews all our benefit programs on an annual basis. The enactment of health care reform has not materially changed that process; it has simply added another layer of compliance-related items that we must be mindful of.  Our primary goal of providing benefit programs to meet the needs of our employees and their families remains unchanged. 

Have to studied or instituted wellness programs to contain health care costs for your employees? 

Over the last several years, National Interstate has implemented a variety of wellness programs primarily in response to our employees including initiatives such as an onsite flu shot clinic, monthly newsletter, health fairs including screenings and wellness vendors, as well as lunch and learn speakers. There is no question employees have greater access to information and resources promoting healthy lifestyles than ever before. For an employer, it can often be difficult to quantify the results of individual employees reaching their health goal. It may simply mean that employee was able to attend a son or daughter’s soccer game. Those kinds of results are important in addition to focusing on healthcare cost containment. 

What other things are you doing specifically to contain health care costs for your employees? 

We believe educating employees about the plan they participate in is a key factor in containing health care costs. Most medical plans have discounts and incentives already built into the plan design, yet many times employees don’t fully utilize these features. We work in conjunction with our health care provider to disseminate information to employees so they can make informed health care decisions. 

Do you foresee having employees pay a larger share of company-offered health care coverage?

It is impossible to predict what the future holds in terms of health care costs. What we do know is if our employees collectively work as a team, we have the best chance of minimizing health care costs for our organization. While we make health care choices as individuals, the impact of those choices from a rate perspective is felt amongst the group participating in the plan.

Anthony McBride
Principal, human resources
Edward Jones

How is your company preparing for changes associated with health care reform? 

We have been making changes to eligibility and benefit levels as required by the regulations since the passage of the Affordable Care Act. We have made required modifications to our group medical plan to ensure that it meets the guidelines for 2014. We will continue to closely monitoring the regulations so that we are prepared to meet future requirements of the law.

Have you studied or instituted wellness programs to contain health care costs for your employees? 

We have had a wellness program in place for several years, and anticipate it will help contain cost increases in the future by motivating our plan members to be aware of and gradually improve their health over time.

Due to health care reform what other things are you doing specifically to contain health care costs for your employees? 

By 2009, we had moved to a consumer-driven health plan model. Our plan includes some pharmacy and medical treatment programs that help direct members to lower cost, higher quality sources of care. Soon we’ll introduce online cost/quality transparency tools to help raise awareness of the disparate cost spread that can exist even within an approved provider network. 

Do you foresee having employees pay a larger share of company-offered health care coverage? 

While we do not plan to shift a greater proportion of the cost to associates in 2014, the overall costs for health care continue to rise. In this regard, we have added a surcharge to cover spouses who have their own employer-based coverage available. We cannot speculate on what may happen in the future because the health care landscape is undergoing so much fluctuation.

 

Monday, 23 December 2013 02:20

Out of the box: Walter Ulrich

Emerging technology: HTC’s work with entrepreneurs and startup companies provides them with in-depth guidance

I started out as a geek, a technologist — I loved dealing with technology. But as I grew in my career, I realized that technology was only a means to an end and the end was to do something interesting, something that would help people, patients or companies succeed.

So I became a business person, and I love being at the Houston Technology Center because it combines that little geek that is deep down inside me with the joy that I find in translating technology into commercial success, business success, new companies and good jobs.

The Houston Technology Center, a nonprofit 501(c)(3) organization, is the largest technology business incubator and accelerator in Texas, advancing the commercialization of emerging technology companies in Greater Houston.

In fact, the center has been named one of Forbes’ “Ten Technology Incubators Changing the World,” and one of “Twelve Business Incubators Changing the World.”
Each day, the staff and partners of the Houston Technology Center work closely with entrepreneurs and startup companies providing them with in-depth strategic and tactical business guidance, fundraising advice and connecting them to opportunities, allies and capital.

Promoting ‘tech city’

As a catalyst for change, economic growth and development, the Houston Technology Center’s focus is to assist in the acceleration and commercialization of emerging technology companies. The Houston Technology Center also promotes Houston as a leading technology city and serves as a hub for the local technology business community.

Supported by more than 300 of Houston’s leading corporations and academic institutions, as well as the Greater Houston Partnership, Texas Medical Center, NASA-Johnson Space Center and the City of Houston, the Houston Technology Center has become the region’s center of technology entrepreneurship by assisting companies within several key sectors: energy, information technology, life sciences, nanotechnology and NASA/aerospace related technologies.

There is no end in the application of new technologies to solve the world’s problems, whether it is clean energy, remediating the atmosphere and the water, working with national defense and terrorist issues, the technologies that we see every day are applicable. And we are not talking about generations; we are talking about years.

In 13 years of operation, the Houston Technology Center has provided feedback to more than 1,000 companies and coached more than 250 companies, helping them raise $1.5 billion in capital and liquidity events, and creating nearly 5,000 jobs.

The Houston Technology Center serves as the Gulf Coast Regional Center of Innovation and Commercialization for Texas Governor Rick Perry’s Emerging Technology Fund, assisting small to midsize technology firms expediting the commercialization of new life-changing inventions and improving research at Texas universities.

Character counts

It is a privilege for me to have the opportunity to work with the entrepreneurs who are making these kinds of changes for our community, for our state and for the world.

These entrepreneurs are supported not only by the Houston Technology Center, and my colleagues, but they are supported by volunteers — hundreds of volunteers — and sponsors and board members like Jim McIngvale who each contribute in their own way.

McIngvale has proven to be extraordinarily successful, but the characteristics that he brought to create Gallery Furniture are the characteristics that we look for in all the entrepreneurs we work with — hard work, integrity, persistence and a positive outlook on life.

Walter Ulrich, president and CEO of the Houston Technology Center, was previously CEO of several technology companies and an executive with two major global management-consulting firms. He also serves as chairman of the Gulf Coast Center for Innovation and Commercialization, serves on several boards and is active in major community organizations. Early in his career, he was responsible for the development of the first successful email service. For more information, visit
www.houstontech.org.

To learn more about the Houston Technology Center, like its Facebook page www.facebook.com/HoustonTechnologyCenter and follow on Twitter @HouTechCenter.

Monday, 23 December 2013 07:15

Working Globally: Linda Toyota

‘As the World Turns:’ We can be more productive together if we are aware of cultural nuances

When I look at Houston, the title of the long-running television show, “As the World Turns,” comes to mind. Houston is undergoing an ethnic and cultural transformation and at the same time its reputation continues to grow as a place where people can dream and succeed.

The city’s transformation into an international megalopolis has happened within the past few decades. The metropolitan region is now home to nearly 6 million people. This growth has been significant, but the nature of the growth is also of interest.

Between 2000 and 2010, Houston added more than 1 million people, which is more than any other metropolitan area in the U.S., according to the Kinder Institute for Urban Research at Rice University. Additionally, the Kinder Institute found that Houston has become the most racially/ethnically diverse metropolitan area in the country during this period. Thus, it is not only Houston’s size that has grown but its diversity as well.

The Asian-American segment is booming

One demographic that continues to grow in Houston is the Asian population. According to the Greater Houston Partnership, the Asian population in Houston has grown 70 percent between 2000 and 2010. This trend is not exclusive to Houston. Asian-Americans are the fastest growing multicultural segment in the country, increasing nearly 58 percent between 2000 and 2013, which is nearly five times faster than that of the general population, according to The Nielsen Co. report “Significant, Sophisticated and Savvy: the Asian American Consumer.”

As the president of the Asian Chamber of Commerce, I have the opportunity to interact with Houston’s Asian business community and Greater Houston’s business community. Both of these groups continue to have increased interaction with one another as Houston’s internationalism continues to rise. As such, this vantage point has allowed me to pinpoint the issue of cultural misunderstanding as a barrier to better collaboration and productivity for all.

Understanding the relationships

The pattern I perhaps see most is related to how misconceptions of cultural behaviors lead to misunderstanding and sometimes missed opportunities. The truth is that when working within a global context, we encounter individuals whose behaviors in business environments are markedly different than to what we are accustomed. Sometimes misinterpretations of these different behaviors act as a barrier to productivity, collaboration and innovation.

In his book, “The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies,” Scott E. Page, a professor of political science and economics at the University of Michigan, asks the essential question for a rapidly globalizing world: “How can we all be more productive together?”

Page says the answer is actually in environments with individuals from vastly different backgrounds and experiences. Our differences are what make us stronger. Other studies have shown that groups that include a range of perspectives and skill levels outperform like-minded experts.

In the global world today, we must all play an active role in breaking down barriers that prevent us from reaping the rewards of embracing diversity. One of the most common barriers we face are cultural ones. We may perceive the cultural social practices of one group to signify something completely different than intended because we understand it through our cultural lens. However, it is to our benefit to educate ourselves and look below the surface.

This can often be done by studying the practices of other countries or by joining diverse organizations. Often, we share the same values with those we interact and hope to collaborate with. We must not let misperceptions stand in the way of realizing the true potential of what can come of embracing diversity.

Linda Toyota is president of the Asian Chamber of Commerce of Houston. With more than 20 years experience in the nonprofit community, she has worked with a wide array of nonprofit organizations including the Holocaust Museum Houston, the Houston Technology Center, the Texas Heart Institute and the Houston Area Women’s Center. Contact her at ltoyota@asianchamber-hou.org.

Taking an innovative idea, developing it and bringing it to fruition through an incubator/accelerator has proven to be the magic combination for Houston’s Rebellion Photonics. And it may totally change how leaks and explosive accidents are monitored on rigs and at refineries.

The company recently took top honors for its Gas Cloud Imaging Camera in the inaugural Wall Street Journal StartUp of the Year competition of early stage companies. The 2013 winners of the competition were chosen from more than 24 startup companies and from more than 500 applications to participate in a 20-week competition. Company entrepreneurs were assessed on the basis of their firms’ scalability, long-term viability, originality and distinctiveness of their products and services, utility and ability to perform tasks the competition set for them.

“We build cameras that don’t just see colors — they actually identify chemicals,” says Allison Lami Sawyer, CEO and co-founder of Rebellion Photonics. “Instead of seeing red or yellow, the camera sees a methane leak on an oil rig, or it sees a cancer cell instead of a normal cell.”

The core technology was invented at Rice University in Houston and was originally created for biomedical research. Biologists wanted to see live chemical reactions, something they could not do with old technology.

“With old technology, it could take up to two minutes for a camera to take a single image” Sawyer says. “You usually kill the cell in two minutes, and you are definitely not seeing it in real time.

“Our breakthrough product is our Gas Cloud Imaging Camera, which is used for rig and refinery safety. Essentially, the Gas Cloud Imaging Camera identifies gas leaks before there is a hazardous leak or explosion. We take real-time video while our competition may scan each frame line-by-line, and take eight seconds to take one frame. We are imaging at 30 frames per second.”

Sawyer says since reactions happen quickly, leaks need to be detected in less than a tenth of a second.

“We can do that, but — this is incredibly important — you need very high sensitivity. We are often measuring chemicals at parts per million sensitivity. That’s what you need for real world, out of the lab, applications.

“We get a lot of questions about camera range; essentially, our camera can see as far and precise as the lens you put on it,” she says. “For example, if you put our camera under a microscope, it can see at nanoscale precision. When you put the camera in a drone plane and put a spy lens on, it can see for miles. Or you could put a regular Nikon lens on it, and you are just going to see across the room. And even more exciting, you could put it in a satellite with an 18-foot lens and you can see your car from outer space.”

While the development may change the safety process at rigs and refineries, if offers other important applications.

“That is really exciting because it means we can get into all these different applications,” Sawyer says. “We are hoping to make cancer research more successful; we are hoping to make rigs and refineries safer places to work. We hope to help the U.S. defense program. We really believe in the products we are making, and I get to hang out with really cool people all day. This is basically my dream job.”

Dr. Robert Kester co-founder, CTO and inventor of the product, says Rebellion Photonic’s award is exciting.

“The first week or so after we won, our phones were ringing off the hook,” he says. “Several of our big customers sent us congratulations, and what was really exciting was that they were talking about new applications for our camera.”

Working with an accelerator

Rebellion Photonics was founded in 2009 at the Houston Technology Center. As a client company of the center, Rebellion Photonics and Sawyer receive strategic business guidance and direction as well as the opportunity to meet with energy industry mentors and business advisers.
The Houston Technology Center is integrated within the Houston community, not just with other startups, but with corporate America, often serving as an important bridge between the two.

“HTC was incredibly helpful in getting our name out there, with the publicity, and then also introducing us to companies that we would never be able to get into the door on our own,” Sawyer says.

She says that with the publicity over the Wall Street Journal award, website traffic went from a few hundred visitors a month to more than 20,000 visitors in the month they won the competition.

“We are booked solid for product demos until the first quarter of 2014,” Sawyer says. “On the customer front, I really think this has pushed us forward at least six months, maybe even a year. So it has been pretty priceless.”

Rebellion Photonics has been a notable company since its inception. Sawyer and Kester first met at the Houston Technology Center as a consequence of its “Commercialize It” program. The Houston Technology Center’s Innovation Pipeline and Commercialize It programs work closely with major regional universities and institutions to identify and encourage the best innovations to go the last mile to commercialization, whether it’s breakthroughs in energy, new therapies for patients or disruptive materials for consumers and industry.

Rebellion Photonics has won several awards including: the first Goradia Innovation Prize at the Houston Technology Center’s Innovation Conference & Showcase in 2010; a Texas Emerging Technology Fund investment; runner-up in the 2010 Rice University Business Plan Competition; and with the support of the Houston Technology Center and Jones Partners, it won the international King of Thailand prize.

The Houston Technology Center’s acceleration program aids its clients in formulating a compelling business proposition in order to prepare them to generate revenue or raise capital. Its clients work with an acceleration director who guides them in developing and executing their business strategy to achieve their individual goals.  
The Houston Technology Center provides introductions to advisers, funders and customers through networking opportunities and events. Clients graduate with sustainable revenues, a credible team, a validated product and a compelling story.

Currently, the Houston Technology Center has 40 acceleration clients, as well as a growing number of incubation clients at its Johnson Space Center location.

How to reach: Rebellion Photonics, (713) 218-0101 or www.rebellionphotonics.com; Houston Technology Center, (713) 658-1750 or
www.houstontech.org.

Follow Rebellion Photonics on Twitter @RebellionPhoton

Monday, 23 December 2013 01:42

Charitable Giving Front: Deena Carstens Munn

Donate with a plan: Is charitable giving good for business, or just good business?

Companies big and small are seeking ways to give back to their communities. As they do, they’re marrying corporate objectives with community needs, resulting in a victory for businesses and charities alike.

The days of absently writing checks have passed and the era of strategic giving is upon us, which means more work for both parties.
For companies, it means having a well thought out strategic plan for community investment, which includes internal and external engagement. For charities, it means they must better understand each company, their philanthropic programs and business goals, and offer appropriate options for support.

For a company to create a sustainable strategic plan that supports its triple bottom line — people, planet and profits — it must first determine the types of contributions it may offer. A robust philanthropic program will typically offer a combination of non-cash or in-kind product, cash through foundation, or corporate grants and volunteerism.

Non-cash or in-kind product could include software, hardware, printing services, computers, airline tickets, books or corporate assets such as used tables and chairs. Cash is the top means of support offered to charities, which may fund events that in turn fund programs. But it’s advisable to review a full list of funding options to determine the best strategic fit.

As for volunteerism, there are many ways to engage employees, but here are a few:

Employee giving programs

Employees are often looking for ways to get involved. Offering them a structured program such as United Way, EarthShare or your own signature program through which they can engage a charity will empower generosity and engagement. Company matching goes a long way as well, but isn’t a must.
 
Day of giving

Create an occasion to come together as a group for a day of volunteering or a community project. It will show your employees and the community that you care, and you will find employees are happier because helping the community is the right thing to do. It’s a great team building opportunity, too.

Paid volunteer time-off

Offer employees one day off per year to support causes that are aligned with your business. It promotes goodwill and allows your company to work together with employees to make a difference. Skills-based volunteerism, or volunteerism that capitalizes on talents, business skills, experience or education, requires more thoughtful engagement and is the perfect intersection of business and community.    

The biggest challenge I see with corporate giving today is what I call “repeat philanthropy,” meaning companies will fund the same causes and organizations year after year. While repeat philanthropy is financially beneficial for charities, it also introduces risk when budgets, management or focus areas change.

Thoughtful planning will promote proper engagement on all levels and build sustainable programs to ensure long-term success. After all, corporate giving can help attract and retain employees, imbue employees with pride and let employees know that the company cares about not only building its profits, but about the community and the planet, which certainly makes charitable giving good for business as well as just good business.

Deena Carstens Munn earned a degree in sociology from the University of Florida. She has over 10 years of experience in corporate philanthropy and over 20 years of experience working with nonprofit charitable organizations. She is the founder of the Houston Philanthropic Society and also works for IHS as a senior sponsorship manager for CERAWeek. Munn has enjoyed volunteering for Hospice of North Central Florida, Texas Children’s Hospital, the Greater Houston Partnership (Energy Collaborative), Houston Technology Center, Christian Community Service Center (CCSC), P.A.W.S. Houston and The Nature Conservancy. For more information, visit www.houstonps.org.

To learn more about the Houston Philanthropic Society, like its Facebook page www.facebook.com/HoustonPhilanthropicSociety and follow on Twitter @HoustonPS.