A model for business growth in the Milwaukee region – built on collaboration and partnership for the 21st century global competition

A WCEDC INITIATIVE

TAPCO, once a recipient of WCEDC loan support, a third generation family owned small business went from zero government business and export business two years ago to 15% of gross sales from export accounts and growing. TAPCO made innovation and development of "green" products a priority to meet customer demands and give customers ways to reduce energy consumption. TAPCO sees the global push to build infrastructure and the demand for innovation to keep growing populations safe on the roadways. Their recent international development have led to establishing strong distributorships in Latin America, Australia and Canada – seen only as the tip of the iceberg in their global market pursuit with innovative, sustainable products.

Rick Bergholz, CEO of TAPCO. As presented at the Milwaukee World Trade Association meeting March 2010.

Motivation to pursue a new approach to economic development … Historically, communities have taken a 1-dimensional approach to economic development; industrial recruitment, buylocal campaigns, or Main Street improvement. Many went on to offer fiscal incentives and real estate deals that had them competing with nearby communities, creating bad relations and a poor setting for cross pollination of ideas, alliances and business opportunities. In other words, the old method of ED did not support the collaboration needed for knowledge sharing and innovation, nor did it consider how fast we are being enveloped by a global economy.

Faced with an incredibly competitive global market, the new landscape for economic growth must include these three growth drivers:

• Borderless Innovation
• Strategic Sustainability
• New Markets Discovery & Development

As background; WCEDC started in 2008 collaboration and partnership based environmental sustainability initiative with support of leading large companies and local government a roll out of tools, tactics and teams that area small and medium size businesses have eagerly adopted. Therefore the new model recommended here builds on the emerging momentum of regional business community engagement around sustainability and a planned platform for delivering the services efficiently to a growing interest pool of businesses in the region.

This paper will discuss in further detail each of the growth drivers mentioned above and the proposed implementation vehicle that will make it accessible for the region's small and medium businesses.

Borderless Innovation

"Entrepreneurs, researchers and innovators want to be around each other. They want to feed off the shared creative energy. They want access to a shared talent pool. They want to build relationships. So if a region is able to plant that seed – if it's able to create the climate for innovation and build a critical mass – then private investment will follow. Innovation will follow. Jobs will follow."

Economic Development Association John Fernandez

Relying on the same old approach to innovation—closed, in-house and often fragmented—can make an organization less nimble and less able to respond to change. Corporations need more collaboration and more problem-solving contributors. But most companies can't afford to identify and hire new people to "problem solve" and collaborate. Knowledge@Wharton published (February 17, 2010) a report about a conference -- titled, "Borderless Innovation: Management Practices, Promises and Pitfalls" – report indicated that the conference highlighted many of the world's top multinationals have been leveraging the latest technological developments, their expanding global networks and even competitor's expertise to change the way they harness new ideas. GE, P&G, Cisco and Eli Lilly are early adopters of this new model for innovation called "borderless innovation".

As we continue to understand and learn more about "borderless innovation", our challenge is to help small and medium size businesses implement this growth driver as they form the critical supply chain that large business relies on. The position taken here is that the small and medium size businesses will be able to accelerate implementation of this growth driver if they are enabled to engage in a knowledge sharing environment and equipped with the right tools, tactics and teaming arrangement for the right opportunities (at the right time).

"Borderless Innovation" as a collaborative model involves:

• Problem solving/ idea generation by many different people from many different disciplines.
• Large volume of solutions/ ideas generated from which to choose the profitable ones.
• Web-based tools for easy access to information/communication.
• Collaborative networks that develop ideas or solve problems very quickly.
• Results are low cost compared to the same exercise "in-house".

Borderless Innovation has several models based on innovation need. Some companies open up opportunities for anyone to put forth an idea for an existing product, like iPhone where developers anywhere can create an application. Roughly 10,000 applications a month are developed for iPhones. Other companies reach out to customers and ask for new ideas. Dial soap finds 30% of their new ideas this way. Many times the global community comes up with ideas for new products or new uses for existing products that would never have been thought of in-house. Web-based Innocentive (www.innocentive.com) uses this model by inviting "solvers" from all over the world to solve problems or help in the creation of new products or services. Conversely, they have a section where new products and services that have already been invented can be posted in case they would be of interest to others.

The tightening of R&D budgets, the need for speed to market, and global competition make borderless innovation a valuable tool in this economy.

Strategic Sustainability

"Well-known companies have already proven that they can differentiate their brands and reputations, as well as their products and services, if they take responsibility for the well being of the societies and environments in which they operate. These companies are practicing Corporate Social Responsibility (CSR) in a manner that generates significant returns to their businesses."

IBM Institute for Business Value

There are basic fundamentals of business that executives must address, such as cash flow, supply chain, brand value and shareholder returns. Facing fierce competition in a global market brings another challenge that can impact the company's bottom line – sustainability.

What is driving the necessity for sustainability?

• Sharp increase in global environmental regulations, penalties and taxes.
• High levels of competition for diminishing natural resources
• Threats to operational facilities and supply chains due to environmental issues.
• Competitor pressure from those using "green" business practices.
• Buyer pressure for transparent Sustainability Reports.
• Consumer demand for green products and practices.

It is critical to understand these drivers and how they are dynamically linked to impact a company's bottom line. How do we sustain long-term financial performance? What are the new laws, competitors and technologies that could impact our profitability?

There are compelling reasons why companies must actively seek out innovative technologies, products and services that not only lower costs, liability and regulatory pressure but also shift business models and alter the competitive landscape.

A good sustainability approach can:

• Help you attract and retain employees.
• Improve the reputation of your business and the products and services you offer.
• Induce business customers to choose you as a sustainable supplier.
• Increase sales as individual consumers prefer to buy from responsible businesses.
• Make it easier to attract investors and to work with regulators.

New Markets: Discovery & Development

Rite-Hite, headquartered in Milwaukee, Wisconsin is a world-wide leader in the development, manufacture and sale of loading dock safety systems and industrial door solutions is a company that strives for significant percentage of new revenues from new products or new markets as a business strategy. To have such a strategy it is important to generate a large volume of profitable ideas that can rapidly be implemented. This means borderless innovation practices and new markets discovery and development practices need to be well understood in the culture of the organization.

Mark Petri, President, Rite-Hite

One clear path to increased revenue is new markets. Seeking new markets as a growth driver requires tools, tactics and contacts to find and successfully gain new markets. Geographically this may be local, national, international (exports) and through foreign direct investment (FDI). According to www.exports.gov, 95% of the world's consumers live outside of the United States and small to medium sized businesses account for 97% of U.S. exporters but only represent about 30% of the total export value of U.S. goods. Although finding new markets is important, successfully developing them is vital.

New market discovery and development can be created through the network in the following ways:

• Sell existing products/services by being introduced to new channels.
• Sell new products/services by being introduced to existing channels.
• Develop new products as a result of collaboration within the network.
• Reaching new markets by "piggybacking" with others in the network.
• Learn to develop a market based on the experience and expertise of others.

30N Challenge - a unifying challenge to the participants

A collaborative/ knowledge sharing environment creates an important link between knowing and doing. The 30N challenge short for 30% new revenue from new products and/ or new markets will be the unifying goal that participating companies share in this sharing, partnering and collaborating community. Businesses that are attracted to join this network of regional community of businesses will represent companies that are from across many industries coming together for the purpose of innovating and growing their business. The result of a 30N strategy is regular refreshing of customers and product line which keeps you ahead of the competition at all times and ability to manage technology and product obsolescence effectively.

The mentoring opportunity, knowledge sharing, learning together, exchange of ideas, pooling of resources, benchmarking opportunities for companies in a region that identify themselves to have adopted 30N as growth strategy are immense. For this to happen however in today's hyper competitive global environment an efficient platform for enabling the sharing, collaboration and building of teams is necessary.

Way forward and Implementation Vehicle

Our new regional economic development pursuit need to be underpinned on the core principle of building gains from collaboration and partnership – believe that a partnering community is a welcoming community! WCEDC's ability to convene, orchestrate and compel will need to be supported with resources and leadership to build this dimension into our region's (M7) economy driving excellence into our existing small and medium sized businesses. This invigorated business community becomes our beacon that guides other "looking" business from anywhere to locate in this region.

Transform the Partnerships for Sustainability initiative of WCEDC into Smart Business Forum for implementing in the region the capacity and capability for small and medium size enterprises to adopt the growth drivers of borderless innovation, strategic sustainability and development of new markets. Participating companies may have interest in one or two or all three growth drivers. Due to resource limitation of WCEDC and the anticipated pattern of adoption by the business community, these may be rolled out in phases over the next two year timeframe. It is important however for the long term success and radical impact of these to have one core entity in the region that builds the active community of collaborating and partnering companies. SBF will be a dynamic real and virtual organization that evolves over time tackling the growth drivers keeping the region competitive with any other region of the world.

SMART BUSINESS FORUM

Implementation Vehicle

The SBF will be the implementation vehicle for a new version of economic development, an entity that champions the three directives of Borderless Innovation, Strategic Sustainability and New Markets. Step one is to design and structure SBF into a platform for online and offline collaboration.

SBF will be the facilitator:

• Collaboration (groups / individuals alliances/partnerships)
• Resource Sharing /IT tools (Education, training, on-line forums, networking tools)
• Communications/Contacts – internally/ externally (database / media)
• Meetings/Courses/Events (Networking /education /fundraisers)
• Financial Information Resource (Revolving Loan Fund/other business incentives, Venture Capital, Angel funds, Grants)

Who will be motivated to participate?

SBF participants would be those who would identify with the idea of collaboration and partnership to deliver business gains. They may be classified into three categories at any time.

Observers: Those who want to find out what's new and network with other companies.

Practitioners: Those who seek new business ideas. They enjoy talking with other business people and learning about new tools and tactics.

Innovators: Those who clearly understand the advantage of networking across industry lines, and the benefits of open collaboration for business growth that have formed teams and launched collaborative successful growth initiatives.