Published in the Independence Daily Reporter, October 12, 2016

I continue to hear comments in our area, something to the effect of “Now, we can go to work attracting companies with “good” jobs so we can be prosperous again.”  We’ve heard this kind of comment fairly regularly in the past.  Either “If we could only do this or that…” or “We need to do this or that….” we can attract the companies with the good jobs to come here.  In the past, the “this or that” usually involved some kind of financial incentive or tax abatement.

For the most part, gone are the days of big, expensive carrots attracting companies to move into a region, bringing high paying jobs.  Today, with the older style economy gone, economic development is no longer going to work the way it did over the last 40 to 50 years.  If we continue to wait for good jobs to come from this strategy, we’ll continue to be disappointed.

The key to having the good jobs “return” to our region is to develop and grow our existing businesses and encourage the creation of new businesses from within.  We need to grow 50 businesses, to each add 10 jobs instead of thinking we can attract some big company to ride into town on a white horse with 500 new jobs.

This growth can happen by developing new methods of innovation within each company; innovation that creates and brings new products and services to the market in much faster and more prolific ways.  Companies can develop these new methods and there are people now going around the country and world demonstrating how to use innovation for growth and jobs.

With design and prototype capabilities of maker spaces like Fab Lab ICC, bringing new products to market, even for small companies is much faster and less expensive that it was even five or six years ago.  The cost of developing a prototype a few years ago could easily amount to $15,000 – $20,000 and take one to two years.  Last year, in 2015, we helped an entrepreneur prototype 50 sets of patented plastic clips for a total cost of about $1500 and he was finished in 5 – 6 weeks.

The hottest economic areas in the United States are using innovation and maker spaces (like Fab Lab ICC) to promote small business start-ups and growth strategies for existing small businesses.  Once they get that going, the larger companies become interested without financial and tax concessions because they want to be where the action is.  Northwest Arkansas (Fayetteville, Springdale, Rogers, and Bentonville) is one of the hottest economies.  The region is growing at the rate of 30 people per day.  They are accomplishing this by promoting themselves as a region and emphasizing innovation and small business growth.

With the way the global economy continues to change, a focus on innovation and small business growth is the best hope of providing the good jobs.

Published in the Independence Daily Reporter, October 5, 2016

Many small businesses get caught up in the commodity trap, selling a product viewed as a commodity by consumers.  The small business owner engages in a race to the bottom, competing with other small businesses or the dreaded “box” stores to offer the lowest prices.  It’s very, very difficult to win the race to the bottom without eventually going out of business.  Overhead costs of providing the products at the lowest prices are just too high.

In a timeless business curve, new innovations eventually become commodities as more and more people in the market begin to use the products or services.  The desk top personal computer serves as a good example.  I became an early adopter of personal computers when I purchased a machine called the Apple II C in the mid-1980’s.  It did not come from what we now call a “box” store.  The period was pre-Internet so it didn’t come from an online company.  Personal computers were purchased from small retailers who specialized in either just computers or electronics with computers as a new product line.

Over time, personal computers began to become commodities meaning one brand wasn’t distinguished from another and as prices came down, people started to make the buying decision based on price.  Many, many of the small computer specialty shops are gone.  The owners couldn’t compete on price in selling a product that was viewed as a commodity by the average consumer.

In the past, American communities of all sizes have engaged in a race to the bottom to offer the lowest wages, highest tax incentives and even free land to attract companies to come to an area.  It’s difficult to win that race to the bottom too.  Some other community is nearly always willing to go lower and give away more.  It’s a commodity trap.

How do we avoid the commodity trap?  We move ourselves back toward the beginning of the business curve by using innovation to distinguish what we’re doing so we’re not viewed as a commodity.  Then, every time our products and services begin to move toward the commodity side of the business curve, we innovate again and then again.

In 1992, the rebuilding of fuel controls for medium-sized jets was viewed as a commodity by the market.  Vendors providing the work all had to have the proper inspections and approvals so quality in the work was a given.  The innovation that Curtis Lavine provided with his start-up, Kansas Aviation, was turn-around time.  The standard turn-around time in the industry was 30 – 60 days.  Kansas Aviation could provide the same service in 7 – 10 days.

In 2008, Brian Hight and Ryan McDiarmid built what is now Magnolia Scents by Design in the commoditized candle market. Their laser focus on the positive customer experience has been their innovation.

In 2010, Bret Chilcott of Neodesha noticed that his emerging vacuum injection mold business was in a commoditized market.  He used his interest in aviation to pivot his efforts and became a world leader in unmanned aerial vehicles (UAV) used for agricultural.  His company, Ag Eagle is still riding on the innovation part of the curve, selling UAV’s all over the world.

These three companies know that they have to continuously innovate in order to avoid the dreaded commodity trap.  Innovation, by definition, can never become a commodity.  We should all strive to move back to the innovation side of the business curve.

Published in the Independence Daily Reporter, September 28, 2016

There’s a message in our society and our state that is so pervasive most of us don’t even notice.  Or, when they hear the message we don’t realize everything has changed in the last 20 years.  The message is about jobs.  To our youth, the message is about getting a good education in order to get a good job.  To the rest of us, education is all about training people with the right skills to work for others.  For the last 100 years, this has been the only message, but in today’s entrepreneurial economy, it’s incomplete and inadequate.  Who is going to create the companies that will need the employees?  In Kansas, we’ve just assumed that our current companies will always be here and that we need to attract new companies from “out there” to come to Kansas and provide jobs.  This has made us dependent on long-term jobs for our livelihoods; long-term jobs that, for the most part, no longer exist.

We were all born to be entrepreneurs.  Maybe to say born to be entrepreneurial would be more accurate.  That doesn’t mean that we were all meant to own our own businesses, but we’re all meant to be independent in creative thought in the ways we solve problems in our personal, academic and professional lives.

Therein lies the disconnect.  We are born to be independent, creative thinkers, but our society teaches us to be dependent on others for our lively-hood.

The early days of the American economy were characterized by agrarian and craft/merchant economic activity and a certain self-reliance on the part of the people.  After the Civil War, especially in the torn-up South, livelihoods were harder to come by and, with the resumption of the industrial revolution; people gradually migrated from the previous independent entrepreneurial endeavors to the dependent lives of working for others.  In the early 1900’s, business, government and the institution of higher education got together and created an educational system to prepare young people to go to work for others and be good producers.  Students were sorted by age and placed in non-descript rooms.  The school day included bells and whistles to signal changes of activity just as they would experience when they went to work in the factories.

Today, remnants of this educational system are still recognizable in our schools, from kindergarten through college.

The economy today and in the future will be a mix of big business, entrepreneurial small businesses, independent contractors and employees.  Our educational system should be presenting all of the options and allowing our young people to choose.  Until our Kansas politicians and education policy makers and educators recognize the importance of the “rest of the story” besides just jobs, we’re destined for a lack-luster state economy.

Published in the Independence Daily Reporter, September 21, 2016

The quote, “everything that can be invented has been invented”, is generally attributed to Charles H. Duell, commissioner of US patent office in 1899 although the quote’s origin is unclear.  One researcher found the quote in an 1899 issue of a comedy magazine, “Punch” in an article about the oncoming new century.  According to a publication called “Government Technology” in August of 2011, the 8-millionth patent was issue; indeed, everything has not been invented.

Being awarded a patent after coming up with a new idea or invention and navigating through a long and expensive process is often viewed at the “gold standard” of the legitimacy of the idea or invention.  For many new inventors, the goal of patenting the idea or invention has been at the top of the list.  The thinking is that the patent will both validate the idea and protect the inventor from the theft or copying of the idea.  While there are no clear-cut guidelines pertaining to when or even if to patent a new idea or invention, the patent should almost never be at the top of the list.

Contrary to many beliefs, from a practical standpoint, the patent does not offer the iron-clad protection against theft and copying for several reasons.  First, while the cost of getting the patent–$15,000 to $60,000—is very high, the cost of litigation to stop a patent infringement could be ten times that amount.  Second, many times clever copiers can create a product that performs the same function, with just enough design changes to avoid infringement.

At the same time, government employees at the patent office deeming the new idea worthy of a patent, does not always translate to market validation; that anyone wants to buy the new product.  A local banker tells a story of an out-of-state inventor that spent his life savings and mortgaged his house to develop and patent a more accurate rain gage—it leaned into the wind to catch more of the drops.  He had paid for scientific data proving his device was more accurate.  The only problem was that no one cared enough to be willing to buy it.

I know of at least one and maybe two inventors that have put their projects on the shelf because they don’t have the money to apply for a patent.  It’s too bad that they may never know whether their product would add value for anyone in the marketplace or not.  Maybe it would be better to develop what we call a minimum viable product that would be functional enough to test market to see if anyone wants it even at a small risk of someone “stealing” the idea.

A good patent attorney is more of a patent counselor, not just taking money to mechanically apply for the patent on your behalf, but helping  you  decide when and if to patent at all.  We have a relationship with just such an attorney.  He’s invited me to invite any inventors within the Fab Lab ICC network to contact him for a no-charge initial consultation to help determine a practical approach to patent or not to patent and how to proceed.