Friday, May 27, 2011

"Sustainability is about doing more: more innovation, more good ideas."

We subscribe to Ode Magazine, a publication "for intelligent optimists."

Challenging ideas. Typically contrary to dogma in ways that end up being right.

As a person working in economic development and a lifelong entrepreneur, I agree enthusiastically with the positions Editor Jurriaan Kamp and his writing team have taken in the new issue.

Ode Magazine June 2011

"More is better. Sustainability used to be about doing less. Why the new sustainability is about doing more: more innovation, more good ideas."

- From Mr. Kamp's Letter from the Editor, "The more we share, the more we have":

"There are still many solutions to be found from many problems, old and new. We have yet to implement an economic model that sustains all 6 billion of us in a fair and just manner. Our world has to become clean and sustainable. These are big challenges. In order to overcome those challenges, we can offer nothing better than our creativity, the very same creativity that drove the innovation that has given us all the amazing breakthroughs of the past two centuries."

- From Mr Kamp's essay:

The new sustainability. Why we need more economic growth, not less, to create a truly viable future. (emphasis added)

"The quest for sustainability is the modern variant of the Industrial Revolution, and it offers entire generations the opportunity to do meaningful work and redesign societies. We must take full advantage of that opportunity. But we can only do that if we let go of our defensive, conservative vision of sustainability and adopt a vision in which two aspects are central: people and economic growth."

Ode Magazine June 2011.

Monday, May 23, 2011

Value chain best practices

Here's some great entrepreneurship guidelines for creating valuable commercial partnerships. We worked hard to build these kinds of relationships in our businesses.

My friend Joe from our Great Lakes Hubba Hubba food group sent a link to a really good doc I put to use right away.

The title is 'Value Chain Best Practices: Building Knowledge for Value Chains that Contribute to the Health of Source Communities'.

The subject of the paper is building effective 'value chains'. This is a term or art that improves on the old idea of exploiting and extracting profit from your suppliers, those in your 'supply chain'. The value chain approach is to make all links in the chain increasingly sustainable and valuable to all the other links.

I'm utilizing this model to help the Wisconsin Innovation Kitchen become valuable commercial partner to new and emerging food businesses.

I doctored their graphic (above) for this post to highlight one specific stage: PILOT, at supply chain scale.

This is exactly where the Innovation Kitchen fits into the emerging commerce of local food and regional food systems. It can pilot and produce local food processing at supply chain scale.

The data from our market based, real-time experiments in regional food processing will make this, and many emerging models of all kinds increasingly replicable.

This capacity - this link - is helping build value chain partnerships right now. Today.

I print this out and take it with me on sales calls:

From 'Value Chain Best Practices':

Structural Innovations
Changes in infrastructure that enable healthy value chains:


• Contracts to increase knowledge and stability of prices

• Minimum price arrangements to provide predictability of pricing; premiums for established practices (sourcing from small scale producers, environmentally sustainable practices, quality of production, etc); and rapid payments on delivery terms

• Preferential sourcing arrangements based on criteria (quality, scale, environmental practices, certification, etc).

• Information and knowledge management mechanisms that support regular two-way communication and innovation.

• Risk Sharing Fund

Organizational Structure

• Sustainability Manager embedded in buyer group

• Specialized intermediaries to aggregate production and ensure
traceability and quality

• Alignment of incentives within organizations so that the goals of the
value chain are symbiotic with the goals of the engaged organizations

• Working with clusters/associations of smaller scale producers, including the facilitation of effective production associations and investing in their
long term business management capacity.

Market Structure

• Harmonize standards and certification schemes

• Fair implementation of standards to ensure that the cost of certification doesn’t unfairly reduce access for smallholders and that producers participate in the development and implementation of standards.

• Equity arrangements including shared ownership business structures and price sharing arrangements

• Make contributions visible through chain

Practices to avoid in a value chain:

• Threats of “delisting” approved suppliers if prices are too high

• Suppliers required paying for promotions or openings.

• Suppliers have to pay back a percentage of annual sales

• Minus margins (can’t supply at a higher price than to competitors)

• Delayed payment for produce already delivered

• Lowering prices at the last minute to suppliers who have few alternative outlets

• Last minute changing of quantities

• Changing standards with no support or time to change the production system

• Arbitrary removal of farmers from the supplier lists

• Using contracts that cannot be enforced by the suppliers

• Institutionalization of results: how can the learning from a value chain project ripple out from the specific chain to impact the core strategies of a large company and ultimately the whole industry?

• Are there public policies that get in the way of the chain, or if changed may help it grow?

Good directions for the many regional food systems now emerging. I look forward to helping this story grow.

Download this summary from the larger Value Chain Best Practices report.

Value Chain Best Practices: Building Knowledge for Value Chains that Contribute to the Health of Source Communities. Full article.

Thanks to my friend Joe at HollyMead Capital for this valuable and timely addition to the conversation.

Graphic borrowed and enhanced without permission from the final report. Thanks!

Tuesday, May 17, 2011

Dilbert's Scott Adams on teaching entrepreneurship

From a Weekend Wall Street Journal essay by Scott Adams, April 9, 2011

"How to Get a Real Education.

Forget art history and calculus. Most students need to learn how to run a business, says Scott Adams."

"I understand why the top students in America study physics, chemistry, calculus and classic literature. The kids in this brainy group are the future professors, scientists, thinkers and engineers who will propel civilization forward. But why do we make B students sit through these same classes? That's like trying to train your cat to do your taxes — a waste of time and money. Wouldn't it make more sense to teach B students something useful, like entrepreneurship?"

How to Get a Real Education. By Scott Adams, Weekend WSJ 4/9/11

Image borrowed from the WSJ and Scott Adams. Thanks both.

Friday, May 13, 2011

What if more people could buy into startups easily and inexpensively?

One of the key hurdles for any kind of startup or growing business is access to capital. The web is proving out many new ways to make small loans available (I'm a Kiva member) but there is no legal way to use these same tools to sell equity ownership in an organization.

Startups and small businesses can not solicit investments directly from most people without going through a costly Securities and Exchange Commission (SEC) registration.

When my friend and recent business partner Dave and I started our manufacturing business we initially invested our own money and then small amounts from friends.

When our business started winning awards and growing quickly, we needed to raise outside money from a larger circle. Because we could not afford the SEC registration, we were limited to soliciting investments only from accredited investors, which is a legally defined term roughly meaning 'wealthy enough'.

We could not offer a chance to invest in our growing business through a general offering to peers in our industry, to our enthusiastic customers or to the significant audience of individuals who were looking to support green manufacturing and sustainable jobs.

Offering a wide range of people a chance to invest small amounts of money with innovative new businesses would launch millions of new enterprises. Importantly it would grow a valuable new culture of entrepreneurship and ownership throughout our society.

What if we could utilize social media and crowdsourcing to quickly and inexpensively assemble small, enabling funding streams to launch and grow new businesses and new jobs?

I think our country needs to experiment with this starting yesterday. But we can't do it because of current SEC rules which are now about 80 years old.

This may be changing.

Bloomberg BusinessWeek just published an excellent article by Professor Scott Shane, award winning author and entrepreneurship researcher at Case Western University.

My takeaway is the high value in making a change in SEC regulations that will allow small investments ($100 max) with a maximum investment to the enterprise of $100,000. This is a game changer:

Let the Crowd Buy Equity in Private Companies
Bloomberg BusinessWeek. May 3, 2011. By Scott Shane.

"The SEC should change its rules to permit entrepreneurs to use crowdfunding to sell equity. The risk would be no greater to investors than that posed by accepted online lending models."

"Every year venture capitalists and accredited business angels invest in only about 15,000 of the 27.5 million businesses in operation in the U.S., according to my analysis. Many new businesses being started in the U.S. every year could use small amounts of external equity. Analysis by sociologist Paul Reynolds in the Entrepreneurship in the United States Assessment, a survey of American adults undertaken in 2004, shows that a typical new business has only about $15,000 in initial funding, of which $6,000 comes from the entrepreneur."

Why Not Exempt $100 Contributions?

"Allowing entrepreneurs to raise equity online will impose no more risk on funders than they currently face lending money to entrepreneurs online. Last year the Sustainable Economies Law Center asked the SEC to exempt equity crowdfunding efforts of $100,000 or less, with no more than $100 to come from any individual. Allowing investors to purchase such tiny amounts of equity in other people's companies doesn't seem to impose a significant risk of financial loss on individuals."

I'm very impressed by the logic of this argument and I'm excited about the possibilities for entrepreneurship, new businesses and new jobs this effort represents.

Bloomberg Business Week article, 'Let the Crowd Buy Equity in Private Companies'

Professor Scott Shane, Professor of Entrepreneurial Studies at Case Western Reserve University. Author of 'Illusions of Entrepreneurship: The Costly Myths That Entrepreneurs, Investors, and Policy Makers Live by.' 2009 winner of the Global Award for Entrepreneurship Research.

Blog post. Case Western Graduate School of Business. Business as an Agent of World Benefit. About our work at the Wisconsin Innovation Kitchen.

"What's important is getting the whole community more entrepreneurial." MIT program for entrepreneurship. Online lending for global entrepreneurs.

IRS LLC page

Monday, May 09, 2011

Hubba Hubbas. The musical.

We've been calling our emerging hub of food hubs in the Great Lakes region the Hubba Hubbas, of course.

Our Hubba group met last week in Chicago. My friend Karen with Fresh Taste has lit the light of this organization and nurtured it. Much good is already underway.

As a professional skeptic, I am startled by my flat out enthusiasm for working with this group, now organizing around the name 'Great Lakes Food Hub Network'

That said, the Hubba Hubbas are now starting to dance. I love this part of enterprise formation. From silence to melody. Something from nothing stuff.

One signature accomplishment of the gathering was our first statement of principles and practices. Best first line of any doc I've signed on to ... 'Assume good will.'

Great Lakes Food Hub Network
Principles and Practices

May 6, 2011

“Assume Good Will”

The Great Lakes Food Hub Network (Hubba Hubba) is a group of food hub practitioners dedicated to collaboratively integrating the values and practices of reciprocity with those of the marketplace. In doing so, we are creating a commons of resources and experience focused on community wealth creation, to which all contribute and from which all may benefit. Community wealth creation requires the implementation of business models that build multiple forms of capital: intellectual, social, financial, individual, political, natural and built.

This implies:

• Basing our dealings with each other on an ethic of sharing as well as individual self-interest
• Conducting ourselves as a learning community, which implies sharing what we learn as we develop new business practices, and organizing ourselves as a group capable of consulting to one another.
• Envisioning our work from the outset as a set of linked initiatives, not solely as individual enterprises

Over time, we commit ourselves to develop methods and technologies that facilitate reciprocity, learning, and the building of multiple forms of capital. These may include:

• Commitment to local sourcing
• Open source IT platforms
• Revolving loan funds
• Shared branding
• Learning journeys and exchanges
• Co-investment
• Business models that involve farmers, workers and communities as co-owners and partners
• Means to connect to similar networks in other regions of the country

We are intentional about expanding the network and will invite others to participate who share the values and commitments described above and who bring skills and resources that will strengthen the network. Our goal is to build a strong Great Lakes network reaching from Minneapolis-St Paul Minnesota to Rochester New York, with the assumption that we will develop relationships with similar networks in other regions of the country. We intend that the work we do will serve and inspire other networks.


Many thanks to my friend Karen and Fresh Taste for helping seed and nurture our emerging Great Lakes Food Hub Network.

Original hubba hubba post with links to Great Lakes food hub friends.

Underlying hub graphic thanks to atributosurbanos, a project from the Andalusia Center for Contemporary Art

Tuesday, May 03, 2011

Access to health care leads to more entrepreneurship. Period.

As entrepreneurs, the hardest part of raising our family was the cost of providing our own health care. This sometimes means taking outside jobs just for the medical coverage.

Entrepreneurship is based on the availability of options. Fewer options means less innovation.

I'm very hopeful for our country's new innovators, entrepreneurs and emerging small businesses when I see the valuable range of health care upgrades now underway to help them. Certainly nothing is perfect but it is certainly better than doing nothing.

There was a great interview about this recently on the radio program Marketplace from American Public Media.

Is health reform unleashing an entrepreneurial wave?

By Mitchell Hartman Marketplace Money, Friday, April 22, 2011

Sampling from this program (emphasis added)...

"Under the Obama health care reform plan, it's supposed to get easier to find affordable insurance if you leave a job to try your hand at being an entrepreneur. That's the theory, anyway."

"We sent Marketplace's Mitchell Hartman from the Entrepreneurship Desk at Oregon Public Broadcasting to find out if health care reform is unleashing a small business wave."

"Many of these students say they're ready to launch right after college. One thing helping them along: under the new health care law, they can stay on their parents' health insurance until they're 26."

"Starting in 2014, state insurance exchanges will let individuals and small businesses join together to shop for coverage. And insurance companies won't be able to deny coverage or set sky-high rates based on age or preexisting conditions."

"Economist Paul Fronstin at the Employee Benefit Research Institute says the goal is to give everyone access to the kinds of plans big employers offer. And then let people keep their coverage. And that will give people an opportunity to take risks as far as opening up a business, without having this fear about being denied health insurance coverage."

"That fear leaves many mid-career professionals shackled to jobs they'd like to leave. Business consultant Gene Marks says insurance reform could give these people -- with a Rolodex full of contacts, and a cupboard full of cholesterol and blood-pressure medications -- a sort-of "get-out-of-my-9-to-5-job-free" card."

"Gene Marks says it can help companies looking for new blood, too.

"Sometimes there are people you'd like to hire or you'd like to work with, but you can't because they have a preexisting condition. They can't leave their company, they can't change their health plan -- it's very restrictive. Now, with that new legislation, it does open up more opportunities for business owners to go out and grab people and some talent."

"Fledgling businesses now have access to subsidies to help them offer insurance to their employees."


Thanks to Marketplace for a great outline of the economic development value of access to health care.

Health reform is not a cost. It is a critical workforce investment.

You want innovation and entrepreneurship? Access to health care is pro-business.

Is health reform unleashing an entrepreneurial wave? By Mitchell Hartman Marketplace Money, Friday, April 22, 2011