By: Paul E. Kimble
When considering the economy in Pittsburgh, do you see the glass as half full or half empty?
If you said either, I’d have to say you’ve been looking at the wrong glass. Pittsburgh’s economic “glass” is more than half full. With so many people whispering the “R” word (recession) I thought I’d give you a few reasons to be optimistic about the region’s economy.
Here’s reason number 1: Construction. Have you traveled downtown lately? You can’t help but notice the bustle of construction activity. From the North Shore Connector to Three PNC Plaza, with Market Square Place, Piatt Place, and the August Wilson Center for African American Culture nearby, signs of the $3 Billion worth of development abound. In a few years, downtown Pittsburgh will be almost unrecognizable with the addition to the Penguins new arena, a luxury hotel in addition to all the other commercial and residential projects either planned or underway. Over on the North Shore, construction of the Majestic Star casino has begun, and the Steelers just announced plans to build an entertainment complex adjacent to Heinz Field. According to Continental Real Estate, the firm chosen to help redevelop the North Shore, there will be $2.3 billion in new construction between Heinz Field and PNC Park, with approximately 350 apartments, office buildings and retail space. To the east, the former Nabisco plant in East Liberty is being redeveloped as Bakery Square, featuring a mix of retail, office space, a hotel and housing. In addition, the new 1.5 million square feet Children’s Hospital will open in 2009. All of this construction represents my second reason for optimism: Investment.
U. S. Steel Corporation just announced they will invest $1 Billion to upgrade their Clairton Plant. This action, which represents the largest investment since the construction of the new Pittsburgh International Airport, will ensure the continued viability of all of U. S. Steel’s Mon Valley operations. Maybe you forgot, but we still make steel in Pittsburgh. Perhaps you’ve heard of Westinghouse’s plans to build a $140 million nuclear energy campus in Cranberry. While this means a shift of some jobs from area within our region to another, Westinghouse plans to add over 1,000 new jobs as they fulfill a $5.3 Billion contract to build nuclear power plants in China. Westinghouse also won a $200 million service contract to help complete construction of the Watts Bar Nuclear Plant Unit 2, near Spring City, Tennessee. Companies large and small are adding jobs all over the region. TechAssist, a Technology Consulting firm of Washington, D.C., plans to move its national operations center from Washington D.C. to downtown Pittsburgh. CardWorks, a credit card servicing company announced an expansion move from downtown to Station Square. Together, these actions will create 152 jobs in the region. Contrary to popular belief, unemployment isn’t a problem in Pittsburgh, which is reason number three to be optimistic about the local economy.
How do you think the region fares in comparison to the rest of the country when it comes to unemployment statistics? According to the Department of Labor’s Bureau of Labor Statistics latest figures, unemployment is Pittsburgh sits at 4%, four tenths of one per cent under the national rate. Surprised? From the same source we learn that over the last year, Pittsburgh ranks fifth among metropolitan areas of 1 million people or more in the per cent change in unemployment, dropping a half of a per cent. Pittsburgh trailed only Louisville, Boston, New Orleans and Seattle in terms of the drop in unemployment over the past year. We’ve already talked about all the construction going on in the region, and of course, casinos and office buildings and hotels require workers to build them. The Majestic Star alone will employ 4,000 construction workers. In fact, the local building boom puts a strain on the local labor force, which means there’s never been a better time for someone to become an ironworker, carpenter, electrician, steam fitter, or boilermaker.
Maybe working a trade doesn’t appeal to you. Consider unleashing your creative power as an entrepreneur. I recently came across a terrific product, an infant bath tub with a built in digital thermometer. After years of testing bathwater the old-fashioned way, I thought to myself, “I should’ve thought of that!” The company who manufactures the innovative bath tub, Thorley Industries, is based in the Strip District, and recently signed a $215 million licensing deal with Hasbro Inc., to develop new products. What great ideas are bouncing around in your head right now?
I hear what you’re saying, “the credit crunch is going to get us; the “R” word is coming.” Well, consider this—PMI Group of California recently released figures on residential prices in the third quarter of 2007. Home values in the seven-county Pittsburgh region appreciated 4.65%. This increase represents a 2.32% gain over the third quarter of 2006. Pittsburgh was one of only seven regions to see home values go up during this period. As PNC's Chief Economist Stuart Hoffman said recently, "Pittsburgh never had a boom. We're not having a bust."
Never had a boom? Look around. Maybe we’re on the cusp of one now!
Monday, February 25, 2008
Innovate or Fail
By: Paul E. Kimble
What is innovation? Survey 100 people and you might get 100 different answers.
Our closest star, the Sun, sits in the sky approximately 93 million miles from Earth. Light from the Sun takes 8 minutes to reach us. So, when you put on your sunglasses, you’re shielding your eyes from something that actually occurred in the past. Likewise, activities going on in your business today are the result of actions and decisions you made days, weeks or even months ago. Managing day-to-day is managing in the past. To stay ahead in today’s fast-paced world, entrepreneurs must innovate.
What is innovation? Survey 100 people and you might get 100 different answers. Type innovation into your favorite internet search engine and you’ll see hundreds of “hits.” According to Peter Drucker, in his book Innovation and Entrepreneurship, “Innovation is the specific instrument of entrepreneurship... the act that endows resources with a new capacity to create wealth.”
You might be thinking, “Sounds great; now how do I go about it?” Glad you asked. First, establish situational awareness. You must assess your own business, take a look at your competitors and determine where you stand in your industry. Do you have an established mechanism for listening to your customers? How do you communicate with your suppliers? Do you have a plan for growth? Have you put together an employee succession plan? Discovering the answers to these questions will help you determine where you are on your business journey. Second, establish a culture of entrepreneurship within your organization. Most often we think of an entrepreneur as someone who starts their own small business. However, many small businesses aren’t innovative at all; they are just copies of a tried and true formula. On the other hand, Starbucks revolutionized the way Americans bought coffee, even though coffee houses have been around since the 15th century. Entrepreneurship exists within some of the world’s largest companies, yet may be absent from a sandwich shop in the newest suburban strip mall. What makes a culture an innovative one? An innovative culture embraces failure. Innovation means doing something new, often resulting in failure. If employees fear retribution for failing, innovation never gets off the ground. Deploy innovation into your company’s performance review process. Have employees identify their own creativity goals and then measure their progress.
“Oh, no!” I can hear you saying. “We went through this empowerment phase back in the Nineties!” To assuage your fears of a TQM redux, let’s look at what innovation isn’t. Innovation isn’t just about an employee suggestion program; ideas must be translated into specific outcomes. Innovation isn’t about throwing new technology at a problem, either. Innovation manifests itself as an outcome, but also as the creative process that brings a new or improved product or service to market. Innovative business owners must discipline themselves to search the environment for new trends, technologies and changes in customer mindsets. When a market shifts, opportunities for a new product, service or approach present themselves. Innovators also examine their own business processes and look for opportunities to improve. People often work around a weak link in a process rather than find a way to fundamentally change it. Redesigning a process often leads to innovation.
You say, “This sounds complicated.” Let’s simplify things. Xerox’s Chief Technology Officer Sophie Vandebroek described innovation in an interview published in the July 27 issue of Fortune magazine. She said, “Innovation has two elements. No. 1, there is the creative piece, the "Aha!" moment. . . . A lot of what we do early on is dreaming and innovating with the customers. The second piece is the "intrapreneurial" role within Xerox, making sure that this creative idea goes through the whole value chain and becomes the right product for the customer.” Dreaming with customers sounds pretty easy, doesn’t it?
If you’re not inspired to become more innovative yet, consider this—research conducted by management consultant firm Arthur D. Little revealed that companies in the top 20% of Fortune magazine’s annual rankings of the most innovative companies produce double the shareholder returns of other companies in their sectors. By contrast, companies in the bottom 20% report shareholder returns that are less than one third of other companies in their sectors.
Bottom line: Innovate or fail!
What is innovation? Survey 100 people and you might get 100 different answers.
Our closest star, the Sun, sits in the sky approximately 93 million miles from Earth. Light from the Sun takes 8 minutes to reach us. So, when you put on your sunglasses, you’re shielding your eyes from something that actually occurred in the past. Likewise, activities going on in your business today are the result of actions and decisions you made days, weeks or even months ago. Managing day-to-day is managing in the past. To stay ahead in today’s fast-paced world, entrepreneurs must innovate.
What is innovation? Survey 100 people and you might get 100 different answers. Type innovation into your favorite internet search engine and you’ll see hundreds of “hits.” According to Peter Drucker, in his book Innovation and Entrepreneurship, “Innovation is the specific instrument of entrepreneurship... the act that endows resources with a new capacity to create wealth.”
You might be thinking, “Sounds great; now how do I go about it?” Glad you asked. First, establish situational awareness. You must assess your own business, take a look at your competitors and determine where you stand in your industry. Do you have an established mechanism for listening to your customers? How do you communicate with your suppliers? Do you have a plan for growth? Have you put together an employee succession plan? Discovering the answers to these questions will help you determine where you are on your business journey. Second, establish a culture of entrepreneurship within your organization. Most often we think of an entrepreneur as someone who starts their own small business. However, many small businesses aren’t innovative at all; they are just copies of a tried and true formula. On the other hand, Starbucks revolutionized the way Americans bought coffee, even though coffee houses have been around since the 15th century. Entrepreneurship exists within some of the world’s largest companies, yet may be absent from a sandwich shop in the newest suburban strip mall. What makes a culture an innovative one? An innovative culture embraces failure. Innovation means doing something new, often resulting in failure. If employees fear retribution for failing, innovation never gets off the ground. Deploy innovation into your company’s performance review process. Have employees identify their own creativity goals and then measure their progress.
“Oh, no!” I can hear you saying. “We went through this empowerment phase back in the Nineties!” To assuage your fears of a TQM redux, let’s look at what innovation isn’t. Innovation isn’t just about an employee suggestion program; ideas must be translated into specific outcomes. Innovation isn’t about throwing new technology at a problem, either. Innovation manifests itself as an outcome, but also as the creative process that brings a new or improved product or service to market. Innovative business owners must discipline themselves to search the environment for new trends, technologies and changes in customer mindsets. When a market shifts, opportunities for a new product, service or approach present themselves. Innovators also examine their own business processes and look for opportunities to improve. People often work around a weak link in a process rather than find a way to fundamentally change it. Redesigning a process often leads to innovation.
You say, “This sounds complicated.” Let’s simplify things. Xerox’s Chief Technology Officer Sophie Vandebroek described innovation in an interview published in the July 27 issue of Fortune magazine. She said, “Innovation has two elements. No. 1, there is the creative piece, the "Aha!" moment. . . . A lot of what we do early on is dreaming and innovating with the customers. The second piece is the "intrapreneurial" role within Xerox, making sure that this creative idea goes through the whole value chain and becomes the right product for the customer.” Dreaming with customers sounds pretty easy, doesn’t it?
If you’re not inspired to become more innovative yet, consider this—research conducted by management consultant firm Arthur D. Little revealed that companies in the top 20% of Fortune magazine’s annual rankings of the most innovative companies produce double the shareholder returns of other companies in their sectors. By contrast, companies in the bottom 20% report shareholder returns that are less than one third of other companies in their sectors.
Bottom line: Innovate or fail!
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