Friday, September 25, 2009

Fun With Governance

I'm really looking forward to speaking at the Leopold Center for Sustainable Agriculture in Ames, Iowa next Wednesday, Sept. 30.

This will be at a meeting of their Regional Food Systems Working Group, which is a program of the Iowa Value Chain Partnerships initiative sponsored by The Leopold Center. Very cool work. Links below.

I need their help and can't wait to discuss our Iowa County initiative to create a local food-processing cluster.

The biggest issues we are coming across in launching this food-processing cluster are governance related. This will be a wonky subject to some, but the issue is critical. We need new organizational structures to match market opportunities and community economic development needs.

In my opinion the experiments we most need to create should be designed to test alternative business governance structures. We need to take existing and emerging governance tools and mix them up into new platforms for doing enterprise creation and economic development.

I believe we need to experiment with new combinations of entity types. We've got LLCs, cooperatives, S-Corps, partnerships of all flavors, and now even L3Cs. It used to be that you had to pick one entity style and run with it. I think there are a lot of possibilities for doing great development work by creating projects with multiple governance types set up in advance that work in service to one another. Combining the strengths of different types of governance creates many unique tools for creating successful economic development as I see it.

For instance, I'm now helping run a non-profit (or social profit enterprise as my daughter E would say). If I were to advise someone about starting a non-profit I would have them look into organizing legally as a standard 501(c)3 (or (c)6) but having the attorney embed a for-profit LLC within that non-profit structure when it is created. This way you can operate the mission as chartered, but you embed a workable funding source from the outset.

It is always cheaper and easier to put these designs into play at from the outset, especially when outside investors and financial stakeholders are involved. Yes, structures can always be changed later, but it can be complicated, expensive and time-consuming.

That's why we have worked on the forms of governance for the Iowa County food processing cluster so carefully. We want to design and execute a successful experiment that can be reproduced and improved on.

We had only considered cooperative governance at the beginning for a number of reasons, but co-ops have their limitations, just like every other form of governance.

What I seem to be learning in the food cluster is the same lesson I found in my non-profit world: there is a great need for experimenting with governance tools to produce hybrid structures that can work efficiently in this new market. You need to create enterprises that make a profit and are sustainable. You need a way to fit this entity into the world of private and public investors and align everyone's expectations with the community and economic development goals of that entity from the outset.

So, we continue to explore all of these paths. I had a great meeting this week at Isthmus Engineering in Madison, which is organized as a unique form of cooperative. They do some of the coolest design and production work I've ever seen. Check out the YouTube video on their home page linked below.

At this meeting also I got to meet Melissa Hoover who is the Executive Director of the US Federation of Worker Cooperatives. I learned a great deal about challenges facing new enterprises and alternate forms of governance nationwide. Melissa is a really nice person and a wonderful business resource.

I'm convinced the next thing needed for regional economic development are experiments of all kinds in non-traditional and hybrid forms of enterprise governance. Then when those experiments are run and proven effective, their structures can be reproduced inexpensively.

That's what economic developers and funders of all kinds should put some attention into. Right now it's hard and complicated for individual economic developers and entrepreneurs to create these structures. It shouldn't be. Let's do the experiments. Let's find what works. Let's discover which paths are reproducible. Then we can make our results - especially the design of successful hybrid governance models - available to others at a price and hassle-factor they can afford.

Ready access to inexpensive, reproducible hybrid governance structures is a vital, missing piece for regional economic development. I am thrilled to be able to help design experiments with this goal as the object of the work.

Yes, a wonky topic, but I can't think of anything more needed in the world of sustainable economic development right now.

With the help of great new friends I'm convinced our Iowa County initiative can make a lasting contribution to the field of regional economic development and building better regional food systems.

Makes me hungry.

Aldo Leopold Institute for Sustainable Agriculture. Regional Food Systems Working Group

Isthmus Engineering

United States Federation of Worker Cooperatives

Introduction to L3C governance. Short introduction to Low-Profit Limited Liability Companies. Our newest entity form, now emerging state by state.

Friday, September 18, 2009

Plumbing for Joy? Be Your Own Boss

The title of this post comes from a Wall Street Journal article this week which I'll link to at the end. I'll also highlight some really important points this article make about sustainable entrepreneurship.

First some news from Iowa County Economic Development. The Driftless Foods project was awarded a $24,400 grant to help organize and launch. The train is leaving the station. Big, serious steps are ahead, but I have high hopes this wonderful project will power through them and emerge as an effective, reproducible model for doing local-foods entrepreneurship.

Speaking of local-foods entrepreneurship, the contractor is moving dirt at the new Innovation Kitchen that our Hodan Center will be opening next year in Mineral Point. Here again, I would like to help create a reproducible model for opening a state certified, community shared-use kitchen. Done right, a platform like this, operating at a regional scale can create literally hundreds of new jobs and help dozens of existing small food enterprises (SFEs) grow and prosper.

It is just a flat-out challenging and wonderful experience to be able help design these economic development experiments.

The Wall Street Journal article about entrepreneurship was written by Sue Shellenbarger. It opens with a great introduction the perils and motivations of entrepreneurship: "By economic yardsticks, Roger the Plumber should be feeling pretty low. Roger Peugeot, owner of the 14-employee Overland Park, Kan., plumbing company that bears his name, is part of a sector hit hard by shrunken credit and slumping sales. He has been forced to reduce staff and is battling new competition from other plumbers fleeing the construction industry."

"So why is Mr. Peugeot so happy? He genuinely likes fixing plumbing messes, for one thing, and despite the worst recession he has seen, "I'm still excited to get up and go to work every day," he says. He relishes running into people at the local hardware store whom he has helped in the past. And in hard times, he says, his fate is in his own hands, rather than those of a manager. "Even when things get tough, I'm still in control," he says."

(me) Whew… what that guy said.

Now, let's bring up your entrepreneurship possibilities under this scenario. I want you to get to that state of mind. Do you have to start with employees like Roger the Plumber? Do you have to quit your day job?

I would posit that starting a small business while you are still working for managers creates hope and an empowering taste of personal independence and control in people's lives.

"The WSJ continues: "As a business owner, Mr. Peugeot says, "even when things are out of your control, as they are with this economy, you're still in control of your relationships" with customers. Corporate managers and executives may "sit and wonder if they're going to be laid off, or get frustrated with the inabilities of management," he says. "If yo're the owner, you may have to say 'I screwed up,' but it's a lot better than saying, 'I didn't deserve that.'"

As an entrepreneur, you control your outcomes.

Entrepreneurship is also a path to more control over your time. The example the WSJ cites below is about a young mother, but there are seriously great life-improvements for people of every age group when you can take some control over your time.

" The freedom business owners have to control their schedules enables them to adhere more closely to their personal priorities, says Amy Neftzger, an organizational psychologist for Healthways. They have the flexibility to "make it to a child's play, or spend time with family," she says."

In Iowa County I'm doing my darndest to design and build some new platforms that will make this kind of entrepreneurship possible. I'm getting more confident in successful outcomes by the day. This is exactly the style of entrepreneur mentorship that the Small Business Center at WCTC let me create and teach.

Yes, entrepreneurship is a (not the) way to more self-control and personal fulfillment. It's also a ton of work (a fact I've been writing about since these posts started) so go in with your eyes wide open or don't go in.

From the WSJ:

"(Business owners) are more likely to work extremely long hours than people in any other occupation group, other Gallup research shows."

So how to deal with that? Start small. Start now. Make as many mistakes as you can as inexpensively as you can. Continue moving forward even in the midst of adversity. Then you can grow your business as your life allows.

What's totally, eccentrically fun about that process is that you can end up working prodigious percents of every day doing enjoyable, challenging, rewarding work, whose time-flow you control.

You can do it.

WSJ article, ' Plumbing for Joy? Be Your Own Boss', by Sue Shellenbarger. Wall St. Journal Sept 16, 2009

WCTC Small Business Center

I located this WSJ article through Tom Peters' great site

Friday, September 11, 2009

It's not a kitchen incubator.
It's an Innovation Kitchen.

Here in Wisconsin there is great interest in creating publicly available kitchen space to help small, local food enterprises come to life and grow. The short hand term for these efforts is 'kitchen incubators'. The model is that you can rent a state certified (expensive!) kitchen for a modest hourly rate and grow your own food business.

In our area, safety requires that foods produced for public sale need to be processed and packaged in a state inspected facility. Frankly this is a critical marketing benefit to be state certified. These inspections are probably required in most states, but I have not had the time to research.

The idea is to utilize public and private funds as available to create public shared-use kitchens as tools to enable local farmers, food enthusiasts, and food lovers of all kinds to become entrepreneurs.

I believe this idea will work for all kinds of locations. I see a very special place for this work in rural economic development where I spend my time.

I'm wrapped up in this subject at the moment. We have a public shared-use kitchen (kitchen incubator) opening in Iowa County early next year. It will be owned and operated by The Hodan Center, a wonderful enterprise celebrating and enriching the lives of people with disabilities. I am working with the Hodan Center on creating a public shared-use kitchen platform, available to the public when not used by Hodan activities.

I grew up with entrepreneurs, and I've been a working entrepreneur for 35 years. I honestly don't think I've ever seen a bigger, better or easier opportunity to explore entrepreneurship than in what I'm seeing now.

The Slow Money folks refer to these businesses as Small Food Enterprises (SFEs).

I dearly love this idea, but I don't think the phrase 'kitchen incubator' does this movement justice. The possibilities are much bigger and much more profound.

'Innovation Kitchen' is my term of art that embraces the new entrepreneurship possibilities of food. I am fully enchanted with what can happen from these kinds of platforms.

Creating a kitchen is not enough. Creating a network is what is needed. We are calling our new platform 'The Wisconsin Food Innovation Network', or, the Innovation Kitchen' for short.

In our area, we are all indebted to Mary Pat Carlson of the Farm Market Kitchen in Algoma, WI (linked below). Mary Pat pioneered this concept in Wisconsin and is making it work. Mary Pat is generously helping those of us with new kitchens in the planning and building stages understand what's required for these to succeed.

What excites me so much about this idea is that is speaks so clearly to the almost endless possibilities for entrepreneurship these certified kitchen platforms provide.

I've been saying for a long time that this is the Renaissance Age of entrepreneurship and that it's just beginning. I believe our Innovation Kitchen can become a model for enabling all kinds of economies, but the economic development benefits can be especially transformational for rural and agricultural regions.

Our new Wisconsin Food Innovation Network will focus on creating a sustainable platform for creating and growing food-based enterprises. I see the network aspect of this as creating, in advance, relationships for the kitchen with buyers, vendors, professional advisers, and entrepreneurship assets.

The Wisconsin Food Innovation Network will open its Innovation Kitchen in Mineral Point, WI in early 2010. We are planning the public-use protocols with the idea of learning what is most sustainable and reproducible over time and in other locations.

I'll be dedicating our first Iowa County Entrepreneur and Inventor Club meeting to a wide ranging discussion of the kitchen with Hodan staff available for questions. That meeting will be Wednesday, Sept. 23 in Dodgeville, WI at the Stonefield Apartments. Doors open at 5:30 PM. Meeting starts at 6.

I have focused these posts recently on our work to help create our Iowa County Initiative, Driftless Foods. This is designed to create a planned system for a local-foods processing cluster in a discreet region. The Innovation Kitchen fits this project hand in glove. It is my belief that over time, some entrepreneurs working from the Innovation Kitchen will 'graduate' into bigger revenue roles and need bigger processing and support capabilities. We will have that infrastructure waiting for them with Driftless Foods.

The time has come to roll this out big time. I am SO looking forward to working with and supporting the Hodan Center and the Wisconsin Food Innovation Network.

I will use this space to report back on what worked, what didn't, and (oh my!) all those possibilities….

The Hodan Center

The Farm Market Kitchen