Approximately 60 percent of the U.S. commercial population is self-funded today, and as health care premiums continue to rise under fully insured plans, self-funding looks to become even more attractive. However, many employers don’t realize how much self-funded health insurance has evolved with strategies and plans designed to help control costs.
“Self-funding does not look the same as it did just a few years ago,” says Mark Haegele, director of sales and account management at HealthLink.
Smart Business spoke with Haegele about how self-funding fits into health care today.
What’s driving the increase in self-funded health insurance?
Health insurance premiums are increasing at an unsustainable rate. Employees pay 89 percent more for family health care premiums, compared to a decade ago. In 2013, premiums only rose 4 percent, but that’s more than twice the rate of wages.
Self-funded premiums typically aren’t as costly. A recent Department of Labor report found that in 2011 fully insured premiums increased by $808, while self-funded premiums only increased by $248.
In response, 60 percent of companies self-insured their health benefit programs in 2011, up from 49 percent in 2000, according to a Kaiser/HRET survey. This increase can be partially attributed to more self-insured employers with fewer than 1,000 people in their health plan programs. In just two years, small and midsize employers that self-insure nearly doubled, according to PricewaterhouseCoopers data from 2010.
How has self-funded insurance changed?
Fifteen to 20 years ago, employers were afraid to trust self-funding, even though they knew it brought certain advantages, such as avoiding premium taxes, risk charges and state mandates. A self-funded environment gives employers more plan flexibility, depending on the disease prevalence or demographics of their population, as well as more access to data and lower fixed costs. But a piecemeal approach to health insurance that went against the insurance market culture was a foreign concept.
Today, there is less fear and higher adoption rates. At the same time, historical best practices still exist — avoiding taxes, risk charges and state mandates with lower fixed costs — as well as additional cost savings where self-funded plans avoid rules and regulations of the Patient Protection and Affordable Care Act.
What do self-funded plans look like today?
There is a market culture shift in the self-funded environment with more flexible plan designs. Member data is now transformed into actionable intelligence. Plans target specific high-dollar categories, such as high-dollar claimants, high-cost imaging, cancer and dialysis treatment, and pharmacy. With more transparency, employers can influence purchasing decisions by aligning incentives.
High-dollar categories like pharmacy are an area where vendor selection is key. Self-funded plans today have more administrator and vendor integration to better control these costs. A majority of employers spend around 16 percent of their total health care budget on pharmacy.
In addition, self-funded plans can be designed with custom networks, based on the cost of care. Through data analytics, plan sponsors can identify preferred facilities, procedures and/or services, and then use the plan design to cover a higher percentage of a preferred procedure or service.
Another strategy is using domestic centers of excellence. With this type of contract, providers offer preferred pricing due to exclusivity and volume. Employers can achieve savings on the unit cost. There’s also a performance component to eliminate waste — the provider gets a bonus for avoiding surgeries.
With pay-for-performance, a budget is set with expected costs, and the health care providers and employer agree on how to measure performance, looking at readmission rates, member pharmacy compliance, minimum levels of care, etc. Then, providers receive a percentage of the savings realized, as an incentive.
Self-funded plans are even utilizing alternative delivery models, such as telemedicine, on-site or near-site clinics and concierge health services.
Self-funded insurance may not be what you thought, so take the time to see if today’s plans would work for your business. ●
Insights Health Care is brought to you by HealthLink
With more than 3 million people set to retire this year, one significant component of retirees’ cash flow is top of mind: Social Security. Yet the staggering options of how and when to claim benefits can be overwhelming.
“That creates a need in the private sector for someone to look at those options and determine what makes sense based on personal circumstances,” says Roy H. Kramer, CPA, CDFA, CDS, NSSA, a member of Tax Services at Brown Smith Wallace.
Kramer, a certified National Social Security Advisor, says it’s important to review Social Security benefits in the context of overall retirement funds, and with a qualified independent adviser.
Smart Business spoke with Kramer about myths and mistakes people make when it comes to Social Security benefits.
Should Social Security be included as part of an overall retirement strategy?
It’s an important component of your entire financial planning and retirement structure. A lot of people think it’s not going to be around for their retirement, so they don’t factor in Social Security, which is a mistake.
The federal government has projected that 100 percent of current benefits are funded through the year 2033, and then at 75 percent for subsequent years. So we know Social Security has sufficient resources to pay benefits through 2033 and retirement planning should reflect that. Clearly, there also will be some discussion about what to do post-2033 because that reduction would be devastating to retirees who worked so hard and paid into Social Security their whole lives.
What’s the first step to figuring out when to take benefits?
Go to www.ssa.gov and set up an account. It’s the only way to access Social Security statements that previously were mailed. There may be mistakes, and correcting them can be a time-consuming process made more difficult if years have passed and documentation may not be readily available.
A common error may be a Social Security number improperly transcribed when a person is married, and years can go by before it’s caught. Most people don’t keep copies of W-2 forms and tax returns after the statue of limitations has expired. So it’s important to review the information on the website to ensure there are no glaring errors.
What are some often overlooked strategies?
One option, which has been available since 2000, is called file and suspend. If you are married, typically one spouse is a high-income earner and applies for benefits at the retirement age of 66. But he or she suspends receipt of those benefits until age 70. That provides what is called a delayed retirement credit, which increases the benefit by 8 percent a year for a total of 32 percent more at age 70. Applying for benefits allows the other spouse to claim spousal benefits of half of the applicant’s Social Security benefit, without reducing the first filer’s benefit amount. So the family can collect Social Security earlier while increasing the benefit received at age 70.
There’s also a rule that allows you to collect benefits on an ex-spouse if your benefits are less. You have to be at least 62, been married at least 10 years and not currently married. You can apply for spousal benefits if the ex-spouse is eligible for benefits, regardless of whether he or she has applied. Overall, Social Security benefit decisions are more effective when considered in conjunction with tax planning.
How are benefits determined?
It’s an indexed average of the 35 highest-earning years of work history. But in order to qualify for Social Security, you must have paid into the system for at least 40 quarters.
When deciding whether to take early retirement at age 62, collecting benefits at the established retirement age of 66 — for those born in 1954 or later — or waiting until age 70, you have to consider your personal situation.
One couple with both spouses in poor health needed the money and filed at age 62. The thought of them living to the average age expectancy of 84 for a woman and 81 for a man was not a realistic possibility.
But if you can afford it and have a family history of longevity, you can wait until 70 and enjoy that 32 percent increase in benefits for a long time. ●
Find out more on this and other tax topics at Brown Smight Wallace.
Insights Accounting is brought to you by Brown Smith Wallace
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) recently updated the Internal Control-Integrated Framework. The goal is to provide greater clarity and guidance related to the design and implementation of an effective system of internal control. In order to implement the COSO Framework by the December 2014 deadline, companies need to get the process started now, says Amy M. Ribick, CFE, CRMA, manager in Risk Advisory Services at Brown Smith Wallace.
“By starting the process now, organizations can have a structure and plan in place by next spring and make the transition seamlessly ahead of the Dec. 15, 2014, due date,” says Ribick.
Smart Business spoke with Ribick about the COSO Framework, what will change with the 2013 update and the process of transitioning to the new standards.
Who uses the COSO Framework?
Most organizations use the COSO Framework to provide a structure for their internal control environment. While publicly traded companies typically use it to assist in the evaluation of internal control over financial reporting, all companies are able to leverage COSO for their overall internal control framework. COSO provides an approach to designing, implementing and evaluating effective internal controls to help ensure the achievement of a company’s strategic, financial, operational and compliance objectives.
What are the significant changes?
The essences of the COSO cube, as it’s referred to, have not changed. The original Framework has been streamlined and underlying principles have been added, which contain specific areas of focus. These changes provide greater guidance and an opportunity to enhance internal control by bringing focus to the specific principles.
The most significant changes in the update are the 17 principles that have been articulated to help in assessing the internal control environment. Within the principles, there are 79 points of focus to provide further guidance on what organizations should consider when evaluating the environment. Another key part of the new COSO Framework is the focus on corporate governance, technology and fraud awareness. The focus for several years has been on financial reporting controls, but internal controls are broader and intended to address other important business objectives such as fraud or internal reporting used by management to make key decisions.
Can companies handle the transition alone?
Many companies have the necessary skills to handle the transition internally. However, others will struggle with finding the resources and time to be able to focus on the transition. There can be advantages to utilizing an external resource — for example, it helps facilitate the transition process so that management and key members of the team can focus on their day-to-day responsibilities. It also provides companies with an independent, outsider’s perspective that may allow for the identification of opportunities to improve existing practices. When assembling a team, it’s important to include people from all areas of the organization so that all aspects are considered. Particular attention needs to be directed to the principles and points of focus attached to each portion of the COSO cube.
What might be most difficult to implement?
Because there has been so much focus in recent years on internal control over financial reporting, many people assume that’s where controls are needed. Of course, if numbers are reported erroneously or fraudulently, that affects the business. But the COSO Framework points out that bad business decisions and fraudulent activity can occur in any aspect of an organization, not just those related to financial reporting. Education on the importance of sound internal controls throughout an organization will be very important.
Companies also will need to provide evidence, documentation and support of their internal control methodology, risk assessment processes, etc., and show how these principles have been addressed.
This is a big undertaking and companies that start earlier will be able to take advantage of the opportunity to improve the efficiency and effectiveness of their internal control environment.
Amy M. Ribick, CFE, CRMA, is a manager, Risk Advisory Services, at Brown Smith Wallace. Reach her at (314) 983-1347 or firstname.lastname@example.org.
For a copy of “5 Steps to COSO Transition Success” to get started on your COSO transition plan.
Insights Accounting is brought to you by Brown Smith Wallace
Starting next year, the Affordable Care Act requires individual and small group insurance plans to cover 10 “essential” health benefits. But, these minimum essential benefits go beyond the coverage that many individuals and small businesses purchase today, so plan costs may increase to meet the coverage requirements.
“Regardless of your funding type, whether you’re self-funded or not, your plan is required to provide the minimum essential benefits,” says Mark Haegele, director, sales and account management at HealthLink. “But something that wasn’t really contemplated is the difference by states based on price points from different providers.”
Smart Business spoke with Haegele about the minimum essential benefits and their impact on individuals and small employers.
What are minimum essential benefits?
Starting Jan. 1, 2014, all health insurance policies sold to individuals and small employers must cover a broad range of benefits, setting a standard for all plans and allowing for easy comparison. The 10 categories of coverage are:
- Ambulatory services.
- Emergency services.
- Maternity/newborn care.
- Mental health/substance abuse.
- Prescription drugs.
- Rehabilitative and habilitative services and devices.
- Laboratory services.
- Preventive and wellness/chronic disease management.
- Pediatric services, including oral and vision.
Plans offered on the insurance marketplaces also must cover these benefits.
In addition, plans will be separated into tiers, which helps consumers compare plans. Known as the metal levels, there are bronze, silver, gold and platinum plans. Essential health benefit plans must cover at least 60 percent of costs. The only exception is catastrophic plans that target people younger than 30 or otherwise unable to obtain affordable coverage.
How is this different from minimum essential coverage?
Although they sound the same, minimum essential coverage (MEC) only applies to large employers, those with more than 50 full-time equivalent employees. MEC relates to the employer mandate, ‘play or pay,’ that was pushed back to 2015, where employers must at least provide preventive and wellness care or face fines.
Small employers aren’t required to offer insurance. But if they do, the plans they buy must cover the 10 essential categories.
Large employer group plans do not have to cover the essential health benefits, but there cannot be annual or lifetime dollar limits on the benefits within this set.
How might minimum essential benefits increase insurance premiums?
Plans may now have to cover new areas, such as pediatric vision care coverage as part of the medical benefit for children up to age 19, which could increase premium costs. Like other essential health benefits, there are no annual or lifetime dollar limits allowed.
According to the U.S. Department of Health and Human Services, many individuals purchasing coverage don’t currently have coverage for maternity services (62 percent), substance abuse services (34 percent), mental health services (18 percent) and prescription drugs (9 percent).
However, the out-of-pocket costs paid by individuals will likely be lower, according to the American Academy of Actuaries.
How might costs vary by state?
If you live in a state with a lightly regulated insurance industry, the minimum essential benefit plans’ more comprehensive coverage will have a greater impact. That’s because insurers previously sold ‘bare bones’ plans that excluded the sick, keeping costs down. Independent estimates of premium impact in the individual market, according to America’s Health Insurance Plans, have large increases in Maine (33 percent), Indiana (20 percent) and Ohio (20 percent). Other states — Rhode Island (0.13 percent), Colorado (2.2 percent) and Wisconsin (6 percent) — will see less of an impact.
To further complicate matters, states can specify benefits within each of the essential categories, at least for 2014 and 2015.
Mark Haegele is director of sales and account management at HealthLink. Reach him at (314) 753-2100 or email@example.com.
Insights Health Care is brought to you by HealthLink
Over the course of 50 years in business a lot can happen. In the case of Kurt Canova and Tech Electronics, many of those years have been successful, but that success hasn’t been achieved without a few issues in need of fixing.
Canova’s father started Tech Electronics, an independent provider and integrator of commercial communications systems, in 1963.
“The vision back then was a one-stop shop,” says Canova, who is the company’s president. “We used to call ourselves a total communication system. Today we see that concept evolved into a systems integrator, and Tech has become a technology services organization that concentrates in business communication systems.”
Tech Electronics’ primary product lines are fire alarm, security, voice, data, sound and audiovisual. The company serves the health care, education, commercial and industrial markets, and has seen growth in recent years.
“The last three years have been particularly exciting because we’ve been able to go from two office locations to six office locations and become a strong regional service organization,” Canova says.
Despite Tech Electronics’ longevity, celebrating 50 years in 2013, the company has had to overcome its share of challenges to get to the position it’s in today.
“We were growing as a company, but our systems weren’t keeping up,” Canova says. “Your internal systems have to be able to keep up with the growth and the timeline expectations of customers.”
The 250-employee, more than $45 million company wasn’t growing in an efficient manner. Canova had to make some necessary changes within Tech Electronics to ensure the company would survive for the next 50 years and beyond.
Here’s how he has helped Tech Electronics grow more efficiently.
Identify weak points
When you’re trying to grow but there are issues within your business, it is imperative that you do an assessment to understand what those issues are, why they’re happening and how you can fix them.
“One of the things my dad used to tell me was the phrase, ‘Growth without efficiency is counterproductive,’” Canova says. “Growth is a great thing, but it’s only if you can still provide quality, because that’s your reputation as a company. Once you start losing that, you’ve lost everything.”
Tech Electronics had started to see customer complaints in several areas of the business.
“That’s when we had to take a step back and do a self-assessment,” he says. “Nobody likes to hear about the bad things, especially because at that time one of the core things that led us to success was quality, and we were starting to see degradation. That’s one of the hardest pills to swallow when you see performance is lacking.”
As a leader you have to ask why performance is lacking and then keep slicing that down to get to the root cause. Sometimes that’s a process, and it doesn’t happen overnight.
“Once you get to that answer, are you willing to do something about it?” Canova says. “You have to have the pulse of what’s going on in the business, and you have to have a management team that can look at itself and say, ‘Hey, we have to fix this. Even if it means we’re going to stall our growth, this is more important.’”
Fixing the problem
Stalling the company’s growth is exactly what Canova and Tech Electronics had to do. For two years the company focused on updating its ERP (enterprise resource planning) system and implementing process improvement.
“The first thing we had to do was implement much stronger internal systems, which was an ERP system for us,” Canova says. “Now we were able to do the full integration of all of our different departments. That was a big challenge for all the employees, because they basically had to relearn their jobs.”
That whole integration process took about three years to settle down.
“Coming out of that three years we were ready,” he says. “We were poised as a company. Originally we were going from work order generation to invoicing, which could take us up to 60 days and shrunk it down to two weeks. Today, we can generate a service work order to invoicing in one day. Our systems no longer limit us. Now it’s just a matter of getting our employees to drive continuous improvement.”
The ERP system got Tech Electronics to think differently. One of the things Tech Electronics did was create new departments, including an organizational development department that concentrates purely on the internal employee.
“They’re constantly determining what we need to do,” he says. “What are our barriers, obstacles or new ideas? When you’re looking at growth, you have to first have a mechanism to fuel that growth. Adding organizational development and getting the employees engaged in that gave us an internal engine to fuel growth.”
Now the challenge became continuing the company’s growth.
“We had to go to other cities in order for us to grow as a company,” Canova says. “Over the course of the last three years we have made two acquisitions, but we had to get to that point first.”
Tech Electronics had to become financially stable, so it put together a financial plan, built-up cash reserves and then put together a specific plan for where the company wanted to go. The company eventually pulled the trigger on those acquisitions and in the last year and a half it has been working diligently on integrating them.
“You have to take a look at what you want to accomplish, develop plans to accomplish that and then you have to have the discipline to stay with it to execute,” he says.
Plan for future growth
To grow outside of your current market, as Tech Electronics wanted to do, you have to have a plan for how you want to do it.
“We do six days of strategic planning every year in which we bring the management team together,” Canova says. “We have a facilitator that we use to help tee-up topics to give us advice. We also reach out to advisers a lot. We rely on other people to help us out in order to make the best decision.
“Again, it’s all about self-assessment and that’s where the outside perspective can give you advice or tell you something you’re not aware of.”
When Tech Electronics went through its acquisition, the company had to determine how it was going to make it successful.
“You can’t be individuals in a company when you’re going through strategic planning or making business decisions,” Canova says. “Eventually everybody in the management team has to agree on the priorities and the things that will make the company the most successful.”
Tech Electronics has been successful at mapping out a good plan. The hardest thing for most employees to understand, however, is that acquisitions take time.
“It takes a while to find businesses that are even potential prospects and prospects that you want,” he says. “Then to complete the acquisition takes time and when it happens everyone has to be ready to go.
“We still had to go through a planning process as if we weren’t going to make an acquisition that year, but then be prepared if we did. That was hard, because you never know when an acquisition is going to occur. It took us three years from the time we started looking at doing the acquisition to the time we did our first one.”
Making an acquisition successful relies on a good planning process, ensuring that you bring appropriate team members into that process and creating buy-in and support.
“You can’t go around and get buy-in after things are happening,” he says. “We always had good open communications as to where we were at. At the beginning of our planning process not everyone is in agreement, but when we’re done, everybody is on board.”
A critical part of growing your business through acquisition is to understand how that acquisition will benefit your business and how your business will benefit the acquisition.
“We weren’t looking at a strategic acquisition to bring us into different services,” he says. “Ours was strictly about expanding into new cities for growth within existing product lines.
“We have a very specific sales and marketing strategy that we feel can be successful in any city. Our criteria as a service organization was to stay within the Midwest — it had to be 400 miles within St. Louis so we could provide necessary support.”
The other key to Tech Electronics’ acquisition plan was to expand within the company’s top-three manufacturers — Notifier, Lenel and Mitel.
“We wanted to ensure that the company we took over aligned to our strengths,” Canova says. “Once we have strengths to build off of then we can easily expand from there. It was all about making sure there were synergies in product lines and within a 400-mile radius of St. Louis.”
Whether it has been growing with efficiency or developing the next strategic plan for the company, a lot of that success has to do with the principles Canova’s father instilled into the company.
“The companies that endure are the ones with strong principles in how they conduct business,” Canova says. “Hitting that 50-year mark is a key benchmark in business that shows endurance and the ability to sustain those principles. It says we have great people that know how to take good care of our customers and our customers have shown their appreciation with repeat business.”
How to reach: Tech Electronics, (314) 645-6200 or www.techelectronics.com
Identify what problems are slowing your business down.
Fix the issues, even if you have to stall growth temporarily.
Focus on growth opportunities via strategic planning.
The Canova File
Born: St. Louis
Education: He went to the University of Dayton and received a bachelor’s degree in electrical engineering with a minor in business management.
What was your first job and what did you take away from that experience?
My first job, since my dad was the founder, was working here at Tech. I just worked around the facility sweeping, painting and doing maintenance. Then I worked in the warehouse. As I got older I started working out in the field with technicians on system instillations. I have done just about every position in the company, and I was glad to do that because as the president now it has given me a much greater perspective of what it takes to run the business from the ground up.
Who do you admire in business?
My mentor has always been my father. I learned principles and a way of doing business from my father. He taught me how to run a business.
What are you most proud of at Tech Electronics?
The thing that makes me most proud about our company is our people. They’re just phenomenal in their ability to adapt to the changes in technology. They have a commitment to our customers and truly want to take good care of our customers.
Who is one person you have always wanted to have a conversation with, whether they’re from the past or present?
Abraham Lincoln, because of all he had to deal with and how he overcame it. I’m always in awe of some of the things our country’s historical figures accomplished.
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.