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Friday, November 30, 2012

Tom Still: Why many major companies fail to innovate -- and how some succeed

By Tom Still
Somewhere along the evolutionary path from startups to mature businesses, many companies stop innovating.

That's often unavoidable. Discovery and delivery can be incompatible concepts. As Maxwell Wessel wrote recently in the Harvard Business Review, "Big companies are really bad at innovation because they're designed to be bad at innovation… When corporations reach maturity the measure of success is very different – it's profit."

There are exceptions to the rule, of course, especially in big companies that are learning how to strike a balance. Excellence in execution need not mean incompetence in innovation.

A ready example of a major company striving to remain innovative was on display in Madison last week when Jay Singer, a New York-based executive for MasterCard Worldwide, spoke to the Wisconsin Innovation Network. Singer's presentation and his separate meetings with Madison-area startup companies demonstrated how some big companies aspire to walk the line.

Even though you may carry a bank-issued credit card from MasterCard, it's not a financial institution. It's essentially a technology company that provides networking, data storage, software, analytics, security and related services for financial institutions.

Speaking during the "cyber week" shopping crush, Singer illustrated that fact with some mind-numbing figures about the ability of MasterCard's global data network to handle transactions. On Black Friday, the traditional first shopping day after Christmas, MasterCard handled 2,000 U.S. transactions per second. Its global network, which spans 210 countries and territories, can handle more than 140 million transactions per hour with an average response time of 140 milliseconds.

A major part of Singer's job as group head for MasterCard's U.S. commercial products is to keep that network stocked with products and services that companies of all sizes want. That means staying on the cutting edge of technology, so he meets with emerging companies and entrepreneurs routinely to do his own "shopping" for ideas that might plug into that network.

Singer's approach is to look for innovation that is compelling in ways that can range from filling a niche within MasterCard's existing business portfolio to introducing disruptive technology. Sometimes that means bringing technologies inside so that competitors don't gain an upper hand, but it can also mean working with emerging companies and partners – so long as regulatory hurdles don't get in the way.

One example is the company's 2009 acquisition of Orbiscom Ltd., a software provider based in Dublin, Ireland, which is now the home for one of MasterCard's five innovation labs. The company worked with another partner in California recently to produce another financial services platform in less time than it would have taken inside.

"We went from concept to market in six months versus a minimum of two years in-house," Singer said.

What's this mean for entrepreneurs in Wisconsin? While some startup owners are persuaded they will be "The Next Big Thing" by going it alone, the reality for many is that they can prosper by partnering with larger companies. Larger companies have sales and distribution channels that small companies can't hope to create overnight, even if their ideas and technologies are superior.

Large companies such as MasterCard can innovate by making it a part of the internal culture and recognizing that great ideas also come from outside.

"For executives who want to secure growth through innovation, the answer lies in recognizing the limits of their organization and empowering groups to function with very different goals and operational metrics," wrote Wessel for Harvard Business Review.

Fortunately for startups in Wisconsin and elsewhere, they're not often judged by earnings or quarterly reports. They are measured by how well they pinpoint a problem in the marketplace and pair it with a solution. It's that combination that attracts investment dollars from angels and venture capitalists – and which speeds the transformation from discovery to delivery as a profitable company.

Larger companies in Wisconsin and beyond see startups and emerging companies as potential partners, laboratories and acquisition targets, not just threats to be quashed. It's an opportunity for all concerned.

-- Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.


Wednesday, November 21, 2012

John Imes: Small Business Saturday and Main Street Green every day

By John Imes
On Main Street, small businesses showcase the very best of communities across Wisconsin. When friends and family visit, they aren't shown the cookie-cutter big-box stores or mega shopping malls, but the traditional business districts with local shops, boutiques and restaurants that are a focal point for retailing and socializing.

Main Street businesses are also increasingly making a commitment to more sustainable business practices to improve our environment and strengthen the region as a whole. "Main Street Green" is a new initiative focused on cultivating, educating and supporting those businesses and commercial districts that will serve as models for more sustainable development.

On Saturday, Nov. 24, Small Business Saturday will be nationally recognized. After people rush to the mega-stores on Black Friday, we shop and show appreciation for the small businesses in our communities. Think Monroe Street, Atwood/Willy, Shorewood Hills, Hilldale Mall, the Regent Street neighborhood, and State Street in Madison, plus small businesses in Monona, Middleton, Mount Horeb, Cross Plains and on main streets all across the state that will bustle on Saturday, and personally, I cannot wait to be a part of that movement.

Traditional environmental improvement unfortunately still relies on "command and control" regulations oriented towards large corporations – A system that's ineffective for engaging small businesses and communities on ways to improve economic and environmental performance

At WEI, we work with Main Street businesses that are ready to move forward with more sustainable operations. These leading "ecopreneurs" are implementing innovative best practices to benefit the community and environment in many ways.

For example, by utilizing the Main Street Green Checklist, a stewardship tool that sets effective, yet achievable goals relating to eight major environmental topics, participating businesses will be able to:

- establish a baseline of their current energy, solid waste, water consumption and stormwater impacts
- pursue energy efficiency goals
- incorporate water-saving strategies
- shift their purchasing practices to more local and environmentally responsible choices
- educate their customers, employees and the public about actions they can take to reduce their environmental impact

Moreover, businesses are encouraged to go above and beyond the minimum to achieve higher point totals for further market distinction and better environmental outcomes.

Main Street businesses, no matter the size of the town, define our culture. As staples of each community, they serve as leaders, whether for responsible business practices, fair prices or customer service. We want these businesses to do well because of their connection to the community and to each of us.

So on this Saturday, please support our Main Street small businesses and make sure you buy local and act local everyday by supporting Main Street Green businesses that have a stronger commitment to improved environmental performance. Spread the word about your experiences. Because with a great environment and economy we can all "do well by doing good."

-- Imes is a small business owner and executive director for WEI, a state-wide nonprofit that develops and promotes programs that are great for the environment and economy. For more on Main Street Green, please visit http://www.weigogreener.org


Tom Still: Ask not for whom the road tolls -- someday, Wisconsin, it may toll for thee

By Tom Still
If you mention "toll roads" to the typical Wisconsin motorist, chances are good the reply will include an unflattering reference to Illinois and its 286 miles of pay-as-you-go interstate highways.

In bringing up the subject of toll roads for Wisconsin, Assembly Speaker Robin Vos knew he ran the short-term risk of reminding people of $2 tolls on the Tri-State Tollway and traffic jams for anyone not armed with an I-Pass.

Over time, however, the topic deserves more than a visceral reaction to "FIBs" and their unofficial tax on Wisconsin drivers.

Wisconsin is hurtling toward a financial roadblock when it comes to constructing new roads and bridge and maintaining what's already in place. The state transportation fund is facing a shortfall of $4 billion to $6 billion over the next decade as roads and bridges age – just as gasoline and other fuel taxes are failing to keep pace.

"We should at least ask the federal government if we could have the option to explore a tollway in parts of Wisconsin where we could generate money from out-of-state tourists, and do it in a way that would hopefully pay for our roads," Vos told a WisPolitics.com luncheon this month in Madison. "I live in southeastern Wisconsin, where a lot of my constituents have an I-Pass. It's easy to use, it's convenient. So I'd like to have it at least be a part of the conversation."

You would think Burlington Republican Vos had shot out the tires on someone's Prius. Knowing toll roads aren't popular, talk-show hosts blasted the idea and other state politicians ducked for cover.

Still, in a state that depends on its highway system for commerce, tourism and much more, the idea of allowing toll roads – even if limited to a few interstate corridors – shouldn't be so casually dismissed.

Wisconsin agreed in the mid-1950s not to charge tolls on its portion of the interstate system in return for full federal funding of its construction. Two generations later, that deal is still in place, even if conditions have changed dramatically.

Today, Wisconsin has one of the highest state gasoline taxes in the nation. Its vehicle registration fees are middle of the 50-state pack, but that combination of revenue soon will not be enough to pay for maintenance and new construction.

Why? Fuel efficiency. Everyone should be happy that today's cars are burning less gasoline; it's good for the environment, national security and conservation of what is still a finite resource, even as technology unlocks more domestic oil deposits.

Some cars aren't burning much gasoline at all. Hybrid vehicles and all-electric cars are here to stay and their numbers will multiply. That will mean fewer fuel tax revenues over time, even if alternative fuels reach a scale that begins to replace more conventional fuels. No matter what type of fuel or alternative system is powering vehicles, however, they will always contribute to highway wear-and-tear.

Toll roads may be a part of the answer. Tolls could help pay for so-called "hot lanes" planned for I-39/90 from Beloit to Madison, and eventually to the Wisconsin Dells. Advantages include avoiding higher state fuel taxes, not tapping the state's general fund for transportation needs, negating the need to borrow and reducing dependence on federal aid at a time when Washington is broke. Tolls would allow construction projects to be planned and built faster. They're also a form of "congestion pricing," encouraging users to make more efficient route choices.

Tolls also export a fair share of road maintenance costs to users from other states, which is not without political appeal.

Of course, tolls have drawbacks: There's the actual cost of collection, which would require booths, people and an RFID electronic transponder system similar to I-Pass. It might distort traffic patterns, especially if motorists go out of their way to bypass them. And they're not popular. People don't like to stop to pay tolls, and it would likely take a while for Wisconsin drivers to embrace an I-Pass system, even though it's compatible with systems in about 15 other states.

Another solution is an annual "mileage fee" based on how far people drive, collected in some states when motorists renew their vehicle registrations. But that's a different type of toll because it's still a user fee.

Vos wasn't expecting kudos when he raised the idea of toll roads and he certainly didn't receive any. He at least deserves credit, however, for thinking now about Wisconsin's looming highway fund crisis. Better now than before the car careens off a cliff.

-- Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.

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Friday, November 16, 2012

Tom Still: Diversity of startups reflects evolution of Wisconsin economy

By Tom Still
The lineup at the annual Elevator Pitch Olympics in Madison featured some companies with potentially life-saving technologies. One young firm had developed motion-detection sensors that adjust for squirmy patients inside medical imaging machines. Another had invented a new way to cultivate pancreatic stem cells. A third startup was focused on genomic-based treatments for cancer.

In a quick-pitch contest judged by a panel of veteran investors and a business-savvy audience, none of these young companies won.

They were outscored by a company that uses 3-D technology to help people buy eyeglasses; a startup with “omni-directional,” no-tip luggage; and a company that connects pressure-sensitive mats to software to measure customer behavior in stores and trade shows.

Welcome to Wisconsin’s evolving startup economy, where traditional powerhouses such as medical imaging and biotechnology are making room for companies in other sectors.

For years, most babies in the state’s entrepreneurial crib were named “Bio-this” or “Gen-that,” a reflection of the fact that emerging biotechnology companies were the darlings of angel and venture capitalists.

Young life science companies are still being born in Wisconsin, but the nursery is making room for startups that resemble other fathers and mothers in the state’s economic family. The company lineup at the Nov. 13-14 Wisconsin Early Stage Symposium followed that trend.

In addition to 16 companies in the 90-second Elevator Pitch Olympics, 26 other startups delivered longer presentations to potential investors. They included:

* Two companies that are using different technologies to help fisherman find and catch fish – and even brag about it later using social media.

* A firm with web-based and mobile platforms to help parks and recreation agencies better manage everything from reservations to events to volunteers.

* Another web-based company helps golfers reserve tee times, invite friends to play, track scores, establish a handicap membership, build a profile and communicate with their golfing buddies.

* A company that is building a revolutionary diesel engine for light aircraft – and another that has developed software to improve how pilots train for severe weather.

* A firm that builds adaptable construction and farm equipment that can perform the functions of small loaders, excavators and scissor lifts. It can replace multiple pieces of equipment with a single machine.

* A firm that has developed hardware, software and wireless technologies to help physical therapists and personal trainers monitor and instruct clients.

* A company that has found a way to replace rare earth metals commonly used in electric motors.

While the event still featured plenty of emerging firms with breakthroughs in biotechnology and medical devices, the mix of companies revealed that innovation is taking place across a broad spectrum of Wisconsin’s economy.

It also reflected the 2012 reality of angel and venture capital economics. Not all investors have the money or the patience to stick with a biotech company from lab to marketplace, especially when the hurdles include patents, clinical trials and federal regulatory approvals. Some prefer to invest in companies that will mature sooner, either in terms of product sales or an “exit” that will bring a return on their investments.

Angel groups and venture capital firms that were almost exclusively biotech-focused five years ago are diversifying their portfolios. It’s an investment philosophy that reduces risk and creates a portfolio with a blend of vintage years, with some companies maturing in three years or less and others taking five to seven years to ripen.

Perhaps most important, the diversity of startups at the Early Stage Symposium chipped away at the perception that biotech firms are Wisconsin’s only favored sons and daughters.

Some lawmakers have resisted supporting the idea of a state-leveraged fund to increase investments in startup companies, suggesting it would be a Madison-centric effort. As more companies emerge in sectors such as advanced manufacturing, mobile apps and recreational sports, however, it will become evident that all of Wisconsin will benefit.

Iristocracy.com, the company with the 3-D approach to buying eyewear, is a Madison company, but Novo Luggage’s young owner is from Shawano and Scanalytics, the customer behavior company, was started by UW-Whitewater students.

What screams “Wisconsin” more than fishing, golf, camping, engines and motors? It has taken time, but the state’s startup economy is producing ideas and companies that build on all of its historic strengths rather than a few. For investors and state policymakers, that’s a much safer bet.

-- Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.


Friday, November 9, 2012

Cathy Stepp: New office strengthens DNR's role with businesses

By Cathy Stepp
Wisconsin is taking bold actions in order to out-compete states across the country in the pursuit of economic development, job creation and attraction of new businesses. These efforts will not sacrifice environmental protection, but by working together up-front we should see better environmental outcomes.

What will ultimately differentiate Wisconsin from other states, and differentiate Wisconsin businesses from other competitors, will be the partnership between our private and public sectors, the time sensitive coordination with state government and the extent of innovative programs that can adapt to very diverse business needs. In my first 21 months as DNR Secretary, I have come to realize even more how critical a role the department plays in creating a stable, sustainable business climate.

What started with Governor Walker's creation of the Wisconsin Economic Development Corporation is being strengthened by creation of the Office of Business Support and Sustainability (OBSS) within the DNR. This new office will focus on ten of our most important business sectors, where working relationships between DNR and the sector can build value - both for the environment and the economy.

For each sector we will designate one key staff person as a point of contact within DNR. Sector teams within DNR will be charged to provide specialized support for their respective sectors - to walk in the shoes of those businesses, listen to business needs and understand sector trends. I expect these teams to produce business value and environmental results. I will be listening closely to citizens and businesses alike to hear if we are meeting this goal.

Among the United States, Wisconsin has the most potent set of regulator innovation tools for building profitability and competitive advantage. Our Office of Business Support and Sustainability has been created to capitalize on those tools, and has been positioned to work even more effectively with partners.

Through Wisconsin's Green Tier Law, companies have gained access to new markets, strengthened relationships with customers, expedited permitting processes, accessed cost saving technologies and reduced material costs. Executive Order 69 from Governor Walker set the stage for OBSS to work with businesses and amongst all DNR programs to get more participation and value from this nationally recognized program. Wisconsin Economic Development Corporation, Wisconsin Manufacturing Extension Partnership and the Wisconsin Sustainable Business Council are also key partners with this new office. We are not aware of any other state that has the same level of regulatory flexibility, skill development, peer recognition and level of coordination between those partners as does Wisconsin.

This new office will provide a framework within DNR to ensure the right resources are allocated to do our part for business development. We will make sure that the needs of new and growing businesses are addressed and that broad needs for the business sectors are met. Lastly, we will share sustainable practices and work with partners to assure that the competitive advantages from sustainability are accessible and achievable.

The Wisconsin Department of Natural Resources is poised to do its part in Wisconsin's economic recovery. We want to prove that economic vitality and environmental protection can occur hand-in-hand in this great state.

-- Stepp is secretary of the Department of Natural Resources.


Monday, November 5, 2012

Tom Still: Explosion in 'Big Data' prompting big possibilities for Wisconsin

By Tom Still
At Oak Ridge National Laboratory in Tennessee, a supercomputer called Titan is quietly flexing its digital muscles. With a peak performance of 20 petaflops (more on that term in a moment), Titan is nearly 10 times more powerful than its predecessor and destined to become one of the U.S. scientific community's top computational tools.

It's also largely made in Wisconsin.

All of the nearly 19,000 compute nodes in Titan were designed and built by Cray Inc., the supercomputer company born in Chippewa Falls. Cray's team there and St. Paul, Minn., also designed and built software and other components that accelerate computing through a graphic processing unit from NVIDIA, a California-based leader in computer graphics.

The combination creates 20 petaflops of computing power, with one petaflop equaling 1,000 trillion calculations per second.

Who needs that kind of horsepower? The scientific world, which includes researchers who are designing and operating computer models for research on climate change, biofuels, astrophysics, nuclear energy, combustion, materials science and drug development, to name a few disciplines. Those computer models dramatically increase accuracy while taking valuable time out of the process of finding answers to global problems.

It's an example of the rise of "big data," a term that loosely describes society's ever-increasing thirst for data storage, high-speed computing and parallel programming, which allows non-related databases to interact in powerful ways.

Last week's launch of Titan at Oak Ridge illustrates how Wisconsin researchers and companies are linked to big data, either as providers of systems that implement its use or as end users. Other recent examples:

* The UW-Madison is working with the National Science Foundation and private partners to upgrade how the campus will handle its surge in big data – an effort that could become a model for others. Over the next two years, the campus will upgrade hardware, software and other resources to deal with big data research projects. Examples include neutrino particle detection through the IceCube Project at the South Pole, the collection of satellite weather data by the Space Science and Engineering Center, and the particle physics research conducted by UW scientists at the Large Hadron Collider in Switzerland.

* Scientists at the Morgridge Institute for Research, Indiana University, the University of Illinois and the UW-Madison have received a $23.6-million grant to address threats arising from the development process of software used in technology ranging from the national power grid to medical devices. Called the Software Assurance Marketplace, the effort will include the ability to continuously test up to 100 open-source software packages and analyze more than 275 million lines of code per day.

* The non-profit Milwaukee Institute is helping to build a regional cyberstructure in southeast Wisconsin to assist research universities and other institutions meet their needs for high-performance computing.

* Wisconsin-based companies such as TDS, which owns Vital Support Systems (formerly TEAM Companies) continue to build and fill data centers in Wisconsin and Iowa, in part because both states are geologically stable and shielded from traumatic weather events such as "Superstorm Sandy" that crippled the East Coast. Such centers are primary storehouses for digital data as well as important backups.

* In addition to the Titan project, Cray is working with the National Oceanic and Atmospheric Administration, the Department of Defense, Sandia National Laboratory and the United Kingdom's equivalent of the U.S. National Science Foundation. It is also part of the National Center for Supercomputing Application's "Blue Waters Project," a supercomputer that is expected to be among the most powerful in the world when launched on the University of Illinois campus next year.

From gaming to genomics, and from physics to meteorology, the world's use of digital data is growing geometrically. Wisconsin researchers and companies are a part of keeping pace with big data, which offers new tools for solving some of the world's most pressing problems.

-- Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal.


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