Immigration, Innovation and Job Creation

I found an interesting article in the May 14th issue of the Wall St. Jl. I am including a few excerpts from that article over here. In addition, have added a few elements to reflect my own opinion.

For decades, the US has been a magnet for immigrants. During the 20th century, millions of talented foreigners, from Alfred Hitchcock to Sergey Brin, flocked to our universities and benefited from our financial capital and open culture. In the process, thousands of them started businesses in the US; in fact several of them created entire industries.

There are signs, however that the allure of America is fading. A study by UC Berkeley, Duke and Harvard has found that, for the first time, a majority of American trained entrepreneurs who have returned to India and China believe they are doing better at "home" than they would be doing in the US.

Innovation in the US is driven in large part by first-generation immigrants. The US Patent Office states that immigrants are responsible for double the patents as non-immigrants. A 1% increase in immigrants with college degrees leads to a 15% increase in patent production. In recent years, immigrant inventors have contributed to more than a quarter of all US global patent applications. Since 1995, 52% of all Silicon Valley firms have been co-founded by immigrants.

Why is immigration so essential for innovation? Immigrants bring a much needed set of skills and interests. Last year, foreign nationals received more than 60% of all US engineering doctorates. (American students, by contrast, dominate doctorate programs in the humanities and social sciences). According to the US Department of Labor, only 5% of US workers are employed in fields related to science and engineering, but they are responsible for over 50% of sustained economic expansion.

Immigrants add to the diversity of the US. With diversity comes a multiplicity of cultures, outlooks, different ways of looking at things, different ways of solving problems. With diversity comes innovation. Many of the most innovative places in the world, such as Silicon Valley and New York City, are also the most diverse.

One lesson from all of this is: If you want to build a culture of innovation in your organization, strive hard to promote diversity and inclusion. Try to tap into the value of such multiculturalism. Innovation will be a clear outcome.

How to keep innovation from being smothered by bureaucracy

Issue Date: November/December 2009, Posted On: 12/1/2009 CEO’s Conundrum – Profit Now or Later How to keep innovation from being smothered by bureaucracy By Bob Donnelly Innovation is the lifeblood of every company. To maintain that delicate balance between keeping the firms overall value proposition relevant while enhancing it with neat new innovations is the challenge for all CEO’s. While we all wish that we had that rare innovative talent of Steve Jobs that perpetuates the continuum of cool new life changing devices from Apple that make us “blink” with surprise and then “tremble” with desire to have them, the typical CEO struggles with the more mundane aspects of just keeping innovation alive within their organizations. It’s easy to get lulled into the comfort zone of complacency as a result of the profitability of some earlier unique solution to consumers problems. However, as we have seen time and time again, yesterday’s innovation is quickly surpassed by today’s enhancement and the hubris of success has been the demise of many well known CEO’s. While change is inevitable the majority of managers are by nature not comfortable with change, especially when current operations are profitable. Instead of looking for ways to enhance the company’s value proposition to insure future profitability they are busy exploring ways to increase existing profitability by cutting costs, watering down the brand identity with more expensive varieties, and generally confusing their customers with their behavior. Planning anticipates the inevitable – change, but if you aren’t studying the changing requirements of your customers they will get to the future before you do and will leave you behind. A great example of what is required of every CEO is what AG Lafley did when he took over as CEO of P&G in 2000 and found that the company was slowing down, becoming insular and management enamored with their own publicity. His strategy was to get his team refocused on the customer and their needs and on innovations to enhance their lives. He even went so far as to personally visit a housewife in her small apartment in Venezuela to see what she had developed in the form of creams, lotions, and shampoos for herself. She had created two lotions for her feet, one for her body, one for her hands, and another for her face because she could not find what she was looking for. Lafley’s message from his personal visit to a typical homemaker was that “these creams and lotions are what she says they are, not what we would create for her”. His powerful conclusion from this experience is “it’s not about us, it’s about her”. Lafley captured this and other experiences in his book (co-authored with Ram Charon), “ The Game Changer.” If the CEO of a company the size of P&G can visit a homemaker in her apartment in Venezuela to see firsthand what she created because she couldn’t find what she needed – why can’t you visit with some of your customers who are just around the corner? Likewise, don’t let your company get into the “death by committee” syndrome where the complacent naysayers and bean counters snuff the life out of every new idea that comes along. Without new ideas and innovations emanating from customers changing requirements it is easy to become a victim of your past success. Another lesson can be learned from another classic innovator – Frank Perdue. He took a dull lifeless commodity and by talking to housewives in supermarkets about their desires and requirements turned it into a quality product. Like the homemaker in Venezuela they had unsatisfied requirements for simple things like “no pinfeathers” and a “plumper yellower chicken”, for example. He went on to solve another problem by creating the innovative “pop-up thermometer” so that housewives would know for sure when their chicken was done. Perdue also developed “oven stuffer roasters”, recipe cards stuffed into Perdue chickens, and a variety of other simple innovations that certainly resonated with consumers. So my question to you is if Perdue did what he did with a dead chicken – imagine what you can do with your technology? Growth is a business imperative, and the lifeblood of any growing business is great ideas that can be converted into cool new product innovations a la Apple’s life changing i extensions. It’s a known fact that as time moves on your propensity to grow or improve declines. And the longer a company stands still or only moderately extends its current business, the less chance it has to continue to grow the value of its customer base. Once a company unconsciously morphs into a bureaucracy innovation evaporates. Likewise, the larger a firm becomes the harder it is to create new initiatives that are big enough to significantly alter the law of diminishing returns. However, when annual planning is done properly, it ensures your short term profit goals as well as your long term potential for greater profits. If you are struggling to keep innovation alive in your company or have “hit the wall” and don’t know what to do about it, let’s start a dialogue on how to get back in touch with the changing dynamics of your marketplace. An entrepreneur himself, Bob has spent most of his career involved with starting, growing and selling businesses. Having held managerial positions with IBM, Pfizer and Exxon, he draws upon extensive organizational experience with large and small companies in advising CEOs of growing firms. He is available online to answer questions from Chief Executive readers, as well as offer workshops, tips, books to read and a monthly online column about common issues facing CEOs of growing firms. Bob has been featured in USA TODAY for his work with Inc 500 firms and is associated with NYU's Stern Graduate School of business in their Center for Entrepreneurial Studies where he is a Venture Mentor, Marketing Strategist and Business Plan Reviewer. He is the author of GUIDEBOOK TO PLANNING - A Common Sense Approach to Building Business Plans for Growing Firms, which has recently been reprinted. He is a past contributor to Chief Executive and one of his articles was featured in The Best of Chief Executive. Email Bob at: rmdonnelly@chiefexecutive.net

Innovation

How does one build a culture of innovation in a business? What are the different cultural issues at play in connection with making a company more innovative? Are there interesting cases worth sharing?