Innovation is the process by which an idea or invention is translated into a good or service for which people will pay, or something that results from this process.

The Limitations of Interdependence


InterdependenceWhat do you think? Will Joe stay or leave?

And, more importantly, what would you do?

Joe had worked in the operations side of his uncles’ technology company for ten years before he told them that he wanted to run his own business.

Good for Joe. That conversation led to the creation of an installation company that was actually separate from the base business, and Joe had his opportunity to be a President. Since they financed the startup, Joe’s uncles owned the new installation business. Within a few years, Joe became a minority shareholder. Today with ten more years now under his belt, Joe and his uncles have equal shares.

Whether you handle computers, telephones, furniture, sun rooms or sound systems, growing an installation business has its challenges. It’s labor-intensive with lots of moving parts, conflicting schedules, union versus non-union jobs, tight budgets, high expectations and too little control over what’s promised.

Installers are dependent on salespeople to make reasonable commitments. In a highly competitive environment, that becomes almost impossible. To get the account or the project, a sales person can feel forced to agree to just about any demand. This pressure is tough enough to handle when the installers are in a department within the core business. Installers in a separate business are dependent on promises made by salespeople in someone else’s company.

So Joe and his uncles negotiated a deal to help the companies be interdependent. The core technology company would get discount pricing and give Joe’s business right of first refusal on their installations. For a few years, the majority of Joe’s installation projects came from the family’s technology business. However, he wanted to grow his business faster and learn how to work with a broad range of customers. Joe can’t hire, train or supervise the sales people in the technology company, but he can develop his own sales department. Today, less than 20% of Joe’s business comes from his uncles’ technology company. Hmm…They are his partners. That could be awkward.

Who gets to decide which companies Joe’s salespeople can approach? What about companies that directly compete with the family-owned technology company? How many other customers can be extended the right-of-first-refusal discount before its value is diluted? Have the installers lost the influence they once had with the technology company salespeople? If the promises made by the family-owned technology business become unacceptable, could Joe charge them more money? Could Joe ever buy his uncles’ shares and become the majority owner? If the family-owned technology company continued to be his largest customer, could Joe change his pricing? If independence is Joe’s primary life goal, could he focus “his” installation company on completely different products or customers than the family-owned technology business?

What do you think? Will Joe stay or leave?

And, more importantly, what would you do?

Do You Still Have a “Stay the Course” Board of Directors?

Visionary LeadershipWe can’t think of an industry that is facing more change… turmoil actually…than healthcare. The Affordable Care Act. A fragile economy. Dramatic advances in research and technology. Heightened patient expectations. The tenuous relationship between healthcare providers and insurance companies. Hospital profit margins have been skinny for a long time. Make one bad decision these days and you’re gone.

In the 1990s, the primary strategy for most hospitals was to “stay the course.” If your hospital had been a general community hospital, you kept your locally focused board of directors, upgraded wings and services based on donor patterns, and struggled with the burden of providing so much charity care. Remember? One of the first generally acknowledged system-wide breakdowns was that hospital emergency rooms were replacing family physicians.

In the 1990s, if your hospital had already declared a specialty, investment and growth was incremental. A few major institutions declared specializations or leadership positioning and invested. Many perceived those bold moves as cocky at the time. But the investments made during strong economies have an impact on what happens to an institution during weak economic times. Think about MAYO, the Cleveland Clinic, Sloan Kettering, Johns Hopkins, and Massachusetts General.

It is very difficult for the leadership of “stay the course” hospitals to now step up, make very difficult decisions, commit to specializations, and compete. And often it is particularly difficult for the leadership of those hospitals to change the composition of their boards of directors and/or their executive teams.

Visionary leadership is needed. What would you do if you were the Chairman of the Board of one of the few hospitals located in the poorest/most dangerous city in the United States? Could you have envisioned, negotiated, funded, built, and promoted the new MD Anderson Cancer Center at Cooper Hospital in Camden, New Jersey?

Is your board composed of visionary leaders with connections, skills, and determination? Or are they “stay the course” incremental fearful followers?

The Pros and Cons of Gamification

02A11B2GIn your life, perhaps you could depend on your brother for corny jokes or your best friend to be there in a pinch. I knew that my father could clearly explain confusing mathematics concepts like asymptotic lines. In my family, we learned to play to win and play by the rules. No cheating was an absolute rule. I could count on that.

These days, playing by the rules can seem to others as being naïve.

To win some online games, players must find ways around the rules and obvious premises. In many movies, shrewd detectives find ways to surface evidence no matter what it takes. Search warrants are often portrayed as a nuisance. For a while, the public seemed to be accepting drug enhanced performance of top athletes. Corporations can beat out the competition by tying one another up in court fighting over patent and trademark infringement. Pirates of intellectual property (IP) win. Even if the court case doesn’t go their way, they can afford to pay the fine because they have sold so many products in the meantime…at a higher net profit because they didn’t have to invest in expensive R&D. This presents a huge challenge to organizations like the International Trade Council (ITC).

Gamification is now being touted as the primary way corporations can engage their millennial generation workforce. What was the highest score last month on the major game being played? How can you beat your highest score? On the surface that sounds exciting, competitive and motivating. But what are the rules, and do the rules matter?

I’ve seen more and more trusted vendors become frustrated by the gamification mentality over the past few years. If their customers expect that you must “beat your highest score” over and over again, how much is enough? Those customers are never satisfied. It can also be demotivating to millennial employees. They initially like the game, but they tend to withdraw if they don’t continue to get praise and appreciation or if it feels like the expectations keep going up and up and up with too little reward. We all know young adults who have opted out of the careers for which they earned higher education degrees. Instead of being a math teacher, one of my nephews has chosen to work at McDonalds.

If your company is considering gamification as a strategic direction…corporate culture, be prepared to look at the concepts of rules, beating your previous high score and the pros and cons of ever-increasing expectations. What will customers be able to count on from you if/when it becomes a game?

Is Your Corporate Culture Fueling or Sabotaging Growth?

A few of our clients have had DRAMA as part of their corporate cultures. You know the type. When a team member Corporate Culturemakes a suggestion, it is immediately perceived as an attack on someone else. When employees come into the office in the morning, they immediately tell one another stories about what went wrong on the home front. When a customer complains, the blame game starts plus the problem is blown way out of proportion. And no…they are not both family owned/operated businesses.

The leaders came to us as growth strategists to identify opportunities to speed up their growth. The opportunities were fairly easy to identify from the market (external) perspective. Competitors in both instances were leaving “money on the table” so there is “low hanging fruit” to be claimed. Large corporations have been taking their customer bases for granted, so there is tremendous opportunity for a customer-centric, quality-oriented competitor.

You guessed it, we are focusing on changing their corporate cultures.

IF the leadership teams each truly want their enterprises to accelerate growth, they both must address internal behaviors that interfere with innovation (instead of suggestions being stifled), quick response (instead of losing time to blaming one another), reassurance and trust (instead of exaggeration and a focus on the negative), welcoming optimism (rather than complaints and negativity).

Often corporate culture can be utilized as a leverage point for growth. When a company wins “BEST PLACES TO WORK” awards and has a reputation for investing in its employees, organic growth usually results.

A corporate culture of innovation or excellence can guide mergers and acquisitions. No matter what technology, production capacity or distribution channel drove the companies to combine, alignment of corporate cultures is needed to optimize the return on investment with mergers and acquisitions.

At IMC’s annual GROW! Conference in Las Vegas earlier this week, Dr. Charlotte Roberts provided an excellent presentation about MENTAL MODELS. (Roberts coauthored THE DANCE OF CHANGE and THE FIFTH DISCIPLINE FIELDBOOK.) One of her reminders was that corporate culture is the combination of the prominent mental models. Beliefs and premises are at the heart of mental models and corporate culture.

The lingering post-recession uncertainty, frustrations with Government, global terrorism, etc. have eroded the optimism of so many people in this world. It may be time for you to audit the beliefs, premises, mental models within your organization. When people are jumpy, convinced they might get fired, or waiting for the executives to make decisions, accelerated growth can’t be the first thing you tackle.

[video] Shift Investments from Lawyers to Scientists

Shift Investment from Lawyers to Scientists

After Congress left for vacation earlier this month, President Obama granted Apple® a reprieve in its long running patent dispute with Samsung®. If I understand the situation correctly, Samsung® has accused Apple® of infringing on its standard essential patent related to connecting mobile devices to mobile networks. Apple® claims that Samsung® is violating an industry practice where the holders of standard essential patents license those technologies at “reasonable terms.”

The President’s veto means that the International Trade Commission (ITC) can’t block certain iPhone 4 and iPad 2 models from entering the United States, which helps Apple® sell its older, less expensive models.

This decision has relevance for all innovation-oriented companies. President Obama’s action is the first of its kind since 1987. As a result, the ITC may play a reduced role in complex patent arbitrations.

To some, the decision could seem like bad news for companies with ground breaking products. But my scientist friends and clients have long been saying that the ITC isn’t adequately prepared to deal with truly complex products and patent decisions. Since the ITC has too few options, they too often just ban imports because that is what they have authority to do. American companies and consumers lose.

Some important products have not been developed in recent years because competitors can just threaten to contact the ITC to force an import ban. When that happens, companies spend money on lawsuits and attorneys instead of innovation and scientists. Reversing that sounds good to me.

Nominate Your Customers for Awards

A company’s marketing can certainly benefit from awards.  Organizations that are on the lists of “Best Places to Work” save money on recruitment.  The effectiveness of a public relations (PR) firm is underscored by PRSA “Pepper Pot” awards. Business owners can convey their recovery from a previous downturn by appearing on the various lists of “Fastest Growing Companies.” Marketing Directors usually figure out which awards are worth the time and effort.  The focus is on getting awards that help reinforce your brand and the benefits of doing business with your company. If your brand has anything to do with focusing on your customers, it pays to nominate your customers for relevant awards. 

 One of our clients is Princeton Legal Search Group, LLC.  Recently, we were delighted to nominate Mary Clare Garber for an “Emerging Leader” award.  She loves to network and enjoys making so many other people look good.  It’s been a no brainer to nominate one of my mentors, Joan Verplanck, for various community service and leadership awards. We nominated Anne Klein of AKCG for inclusion in the Philadelphia Business Journal’s list of “Women of Distinction.”  In my opinion, she should have been included on that list YEARS ago, so we must not have done our part strong enough before…but we are working on that.  Mike Lackland certainly deserved our nomination of Storage Assets for “NJ – Family Business of the Year.” Amenta Emma Architects won an award for an advertising campaign which helped to promote their incredible talent as designers and project managers. Granite City Electric won a “Most Improved” award within an electrical wholesale industry group. We are currently looking for awards related to Association Headquarters International and BLINK Reaction, Inc.

It pays to learn where a client attended college because “Alumnus of the Year” awards mean a great deal to most people. My father is an “Alumnus of the Year of the Hershey School for Fatherless Children.”  I am fairly certain that award still means more to him than even being named “Teacher of the Year” at the Rochester Institute of Technology (RIT).

Which of your customers deserve recognition for innovation? Creativity? Customer service? Industry leadership? Community service? Job creation? 

Growth Strategy Tip


I really appreciated your time and wisdom... Yes, we are all on a journey, and I found your view of it visionary and inclusive.

Miriam Kurtzig Freedman, M.A., J.D.
Stoneman, Chandler & Miller LLP

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