Here is a new plan to reinvigorate the automotive and farm industries, while also stimulating overall economic growth.
á Middle class Americans will make lots of money on the program
á Taxpayers donÕt get soaked.
á Creates hundreds of thousands of new jobs.
á Saves hundreds of thousands of existing jobs.
á Dramatically reduces dependence on foreign oil, perhaps even eliminating foreign oil imports altogether.
á Dramatically reduces trade deficit, possibly to the point of our having a trade surplus.
á Revitalizes the automobile industry by making it the envy of the world.
á Revitalizes farming and agri-business.
á Reduces automobile imports and increases automobile exports.
á 50 miles per gallon automobiles would become the norm.
á All bio-fuels, including plant-derived oils, would work in the new cars about to be proposed within this notice.
o Once the cars have been designed to run on plant-derived oils, bio-fuels based on plant-derived oils would become more economically viable than current ethanol-based bio-fuels, encouraging the development of a a strong bio-fuel industry.
á Dramatically reduced carbon footprint; bio-fuel production recycles atmospheric carbon rather then creating new atmospheric carbon as does the burning of fossil fuels.
á Lower automobile repair costs.
The government should issue a firm public offering in the following form, with specifics to be later worked out. Each unit of such a public offering would consist of one or more shares of Jet Turbine Joint-Venture (a hypothetical new company at this point) stock, one or more shares of General Motors, one or more shares of Ford Motor Company, as well as one or more shares of Chrysler. This public offering could be sold through the United States Post Office, and/or stockbrokers.
Jet Turbine Joint-Venture would be a startup joint venture between the General Motors Corporation, Ford Motor Company, and Chrysler Corporation. Jet Turbine would be a company able to develop one or more jet turbine engines for automotive applications manufactured by the three major automobile manufacturers.
The jet turbine is an engine that produces rotary power just like the reciprocating engines used in todayÕs automobiles. Today, jet turbine engines are used in turboprop aircraft, helicopters, and electric power plants. Jet turbine engines are similar to the jet engines used in most commercial aircraft except that they produce rotational power instead of thrust. This allows them to turn the wheels just like a piston engine. Relative to the piston engine, the advantages of the jet turbine are:
Without modification, jet turbines can burn any liquid or gaseous fuels, including those derived from plant oils, any petroleum fuel, as well as gaseous varieties, such as natural gas and hydrogen.
This, in turn, will allow a competitive, efficient bio-fuel industry to develop. Farmers will be able to plant crops capable of producing the most gallons of bio-fuel per acre relative for their particular growing conditions. Farmers will be able to enhance their present per acre/ gallon production of bio-ethanol. This will enable them and agri-business generally, to increase their present earnings beyond currently known levels.
á Vehicles could have one tank for natural gas and another for liquid fuel.
á Jet turbines weigh half as much as the comparable piston engine.
o Every pound of engine weight reduction would result in another two pounds of frame and body weight reduction.
á This weight reduction greatly increases fuel economy.
á Jet turbines are more energy efficient than are piston engines.
á Jet turbines also last longer than their piston driven cousins.
á Jet turbines require fewer repairs than currently used piston applications.
á Like piston engines, however, jet-turbines could be used as the main power plant hybrid electric and hybrid flywheel vehicles to make them even more efficient.
According to Professor David Wilson (MIT), recent advances in materials science make it feasible to develop a small, inexpensive jet turbine engine.
The cost of developing the jet-turbine for automotive use would nevertheless be substantial. Thus, the only way to convert the United States automobile industry to jet-turbine technology is to raise equity funds for the purpose: Therefore, a public offering is the best vehicle.
The jet turbine would transport the United States automobile industry into being exceedingly competitive, both at home and abroad, against both new and used piston engine vehicles. This, would, in turn, make this multi-company public offering an attractive investment. Mere traditional company-by-company bailouts would not be nearly as attractive investments and if put forward, would leave a government bailout as the only viable option.
In other words, investing in the United States automobile industry is not attractive without adding the jet turbine to the mix. Thus, the only two options are to add jet turbines so that private equity capital can be raised or a government bailout if need be. The government could facilitate the raising of private equity once jet turbine is introduced and would prove a better role for the government, and would result in a much stronger economy than would be possible through a straight bailout.
Were Jet Turbine added to the production mix, people would be able to replace their old cars with new ones costing a quarter as much to run. This on itsÕ own will drive sales. Sales of this magnitude would hold the capacity to reinvigorate the automobile industry and create hundreds of thousands of new jobs in the process. This option being presented, should certainly be better than the present alternative of letting the automobile industry go bankrupt and losing hundreds of thousands of jobs; or the alternative of a government bailout to save only the existing jobs. While a bailout would be better than letting the industry go bankrupt, the jet turbine based alternative might hopefully be seen as a much better option.
Switching to farm-raised, plant-derived oil based bio-fuels, made possible by the jet turbine engine, will reinvigorate the farming and agribusiness sectors, to create even more jobs. The income freed up by reduced fuel consumption will drive the rest of the economy towards even more prosperity.
The solution presented here is not only the best possible one; it is the only viable solution. There are no other viable options: The jet turbine is the only possible new technology that could be developed that would have enough impact to reinvigorate either automotive or farming: It will reinvigorate both.
The ability to grow plant-derived oil based bio-fuels will solve the problem of agricultural surpluses by providing a good alternative crop that will always be in high demand. Also, by selecting the appropriate oil-seed plant, plant-derived oils can grow under any existing agricultural condition. Most crops have stringent requirements for growing seasons, temperature, water and the like; but an oil crop can be found for every growing condition.
Since bio-fuel production recycles atmospheric carbon, it has no carbon footprint; hence it is the most effective way to reduce greenhouse gasses. Conventional piston engines, on the other hand, have such finicky fuel requirements that preclude the use of plant-derived oils such as bio-fuels. The jet turbine will burn any kind of liquid bio-fuel, oil, or alcohol; which eliminates this problem, making bio-fuel farming truly viable.
Ethanol is not a cost-effective bio-fuel since it requires too much processing. The only reason that it is being used currently, is that piston engines are too finicky to use cost-effective plant-derived oil based bio-fuels: Jet turbines eliminate this problem.
It is a shame that we as a society must wait for crushing times to discover how badly all of us need innovation such as this. The autoworkers need this; the auto parts suppliers, automobile dealers, and all their employees also. Further, so do the farmers and Agri-business. We Middle class investors need this, as do hundreds of thousands of people presently working directly or indirectly for the United States automobile industry need this to save their jobs: Many more need the new automotive and agricultural jobs that this innovation will create. But, most of all, we cannot afford to buy all of our automobiles from foreign suppliers; such a trade deficit simply is unsustainable.
Were the automobile industry allowed to go bankrupt, it would be gone for good. There is no way to build a new auto industry without a period of high margins and high growth like the one that occurred during less competitive times, when the United States automobile industry was formed.
The introduction of the gas turbine is the only way to feasibly re - create a new period of high margins and high growth needed to rebuild the automobile industry and put production lines back into all of the mothballed plants. Other technologies, such as electric and/or flywheel hybrids, or even hydrogen fuel cells donÕt pack enough punch to do this. This is not to say that we shouldnÕt develop these technologies as well. In fact, that should be a secondary priority for the new Jet Turbine Venture.
Currently, big investment bankers keep the best offerings for their preferred clients, forcing smaller ones to buy them at inflated prices in the secondary market. If the government were involved as a facilitator, they would be in a position to ensure and demand that anyone wishing to participate in the offering would be able to invest for just a few hundred dollars. Out of a sense of fairness, the government must do this. Also, the American people have to feel that they have a vested interest in the outcome, which can only be accomplished by their being participating investors.
The government would need to be involved as a facilitator as this offering would be on the order of a thousand times greater than the conventional IPO. It would need to be advertised on television and sold like war bonds, something that only the government can do. It would have to be a firm offering, meaning that the government would have to agree to buy any and all unsold stock, thus ensuring that the full amount needed would be raised and that the investors would not be hurt in the event of a shortfall. This would be necessary to ensure investor confidence.
Because the investment is likely to succeed spectacularly, it also is likely to elevate the financial status of itsÕ participants. Others are most likely to re-invest in other ways that will both further wealth accumulation and advance the reinvigoration of the United States economy.
One would expect that the gas-turbine vehicle industry would provide the same sort of economic growth as we saw in the personal computer industry or the Internet. These new gas turbines could power all types of vehicles; cars, trucks, motorcycles, construction equipment, small planes, boats, snowmobiles, and personal watercraft.
In a nutshell, the stagnation and decline of the major corporations as a group caused the decline of the real economy. This, in turn, was caused by doing too little high-profit innovation to offset the natural stagnation and decline that occurs as markets mature. Thus, the only answer is for the major corporations to become much better at creating high-profit innovation.
So far, David Sieverding has created six manuscripts-in-progress, each covering various aspects of an innovation-centric, CEO-based-management. He also discovered that when it comes to writing, the gift of original thought is a double-edged sword. An original thinker cannot write an outline and fill in the blanks because nothing in the outline has before been thought of. Hence, the writing takes place one original thought at a time and has to be re-sequenced later to create an outline that the reader can follow.
Original thinkers unfortunately are not very good at re-sequencing. Every time they start to re-sequence their writings, they think up new original thoughts and feel that they have to write them down before they get any more ideas. By the time that is written down, other ideas have crowded in to take their place: They never escape from the relentless stream of new ideas long enough to finish the re-sequencing.
In 2008, Mr. Sieverding became re-acquainted with his old friend Lawrence Levy, who found him on the Internet, and he talked him into co-authoring his manuscripts. Like Mr. Sieverding, Mr. Levy descended from generations of entrepreneurs and holds a similar business philosophy. Unlike Mr. Sieverding, however, Mr. Levy actually knows how to write. He has a Masters Degree in Classics from the University of London.
The Sieverding and Levy team is also working on public policies that will foster entrepreneurship and high-profit innovation. These will do more to stimulate the economy than past Ôthrowing money at the problemÕ extravaganzas.
Revitalizing the economy requires a grass-roots effort. The team of Sieverding and Levy need help getting the word out. You can do that by blogging, emailing the press, and emailing your elected representatives. Ask your Congressman and your Senator to read this web page. Get the word out; It could save your economy and your job.
Mr. Sieverding believes that his manuscripts could be the most complete concept of this sort presently existent anywhere in the world. They represent all of our hopes of getting out of this financial crisis: The economic situation is desperate and he needs as much financial help as possible to get these manuscripts finished and in the hands of the CEOs who need a new management system to create the level of high-profit innovation that they require to turn their corporations around.
Also, the team of Sieverding and Levy needs help finding publishers. It would be better if they could spend their time writing instead of running around looking for these. If there is a lot of interest in letting Sieverding and Levy do their part to fix this mess, influential publishers will seek them out. So please, email your favorite publishers and ask that they seek us out.
Also, Sieverding and Levy need money to pay for a staff of writers, physicists, psychologists, graphic designers, and cartoonists to free up their time so that they can work full time on the problem that most affects all of us.
So, if you think that the team of Sieverding and Levy is doing something worthwhile to help save the economy, send them some money via PayPal to davidsieverding@mail.slides.com.
We cannot afford to let this problem continue. Past economic remedies are proving cumbersome and inefficient with questionable results, and the economy is still fast declining. The only solution, therefore, is to find a way for grass roots managers and engineers to work together to create enough high-profit innovation to reinvigorate the economy.
If you can help, send your contribution by PayPal to davidsieverding@mail.slides.com.
The root cause real economyÕs decline, is the stagnation and decline of the major corporations. This occurred because these major economic contributors failed to create enough high-profit innovation to offset the stagnation and decline that naturally occurs as markets mature. This, in turn, occurred because the majors changed from CEO-based-management to one that is maxim-based during the 1950s.
CEO-based-management was the only form of management that existed during the nineteenth century. It remained dominant until the 1950Õs and it is still dominant within entrepreneurial corporations.
CEO-based-management is significantly more efficient at creating high-profit-innovation; which translates out to effective financial performance and job creation. This is why entrepreneurial corporations are so much better at high-profit innovation than are major corporations.
CEO-based-management caused the rise of the United States economy as well as that of modern Western Civilization: It really works.
At the dawn of the nineteenth century, the United States was an impoverished, war torn political entity far from any major markets. None of the worldÕs ten wealthiest people lived within itsÕ borders. All of them came from European aristocratic families who had amassed vast fortunes over the course centuries.
By the close of the nineteenth century, however, the United States was well on itsÕ way to being the wealthiest nation on Earth; all ten of the worldÕs wealthiest now lived here. The wealthiest person, John David Rockefeller had more money than all the worldÕs aristocracies combined.
The United States economy built a momentum during the era of CEO-based-management. Even as the major corporation moved to the less efficient maxim-based-format, this momentum still was able to carry the United States for several more decades.
The major corporations are no longer going to be able to get away with coasting on laurels of past momentum. The world economy has become too competitive. Thus, the only way for the major corporations as a whole to restore financial performance, is to abandon the 1950s maxim-based-management altogether and return to the CEO-based-management that made the United States great.
Regaining financial performance will come hand-in-hand with increased job creation. A more vigorous job market will lead to increased wages. Hence, when the real economy becomes more robust, there really is a Ôtrickle down effectÕ.
As the major corporations as a whole regain financial performance, they will begin exporting more goods and reducing domestic reliance on imports. This is the absolute formula to reduce and eventually eliminate the trade deficit.
Eliminating the trade deficits is crucial to restoring the United States economy. Though these particular trade deficits may be responsible for triggering the expansion of the financial economy and enriching a comparatively select few, the subprime mortgage crisis, and the expanding other numerous financial crises are too expensive for us do continue; they pose a threat unless and until the major corporations reverse their decline.
The trade deficits led to a staggering outflow of United States dollars into foreign hands. The foreign holders of these dollars had few options but to invest in United States securities. This caused United States capital markets to become bloated with dollars. To be able to invest all of these dollars, the financial industry naturally resorted to making it easier and easier for average people to qualify for mortgages, a practice that ultimately led to the subprime mortgage crisis, which, in turn, triggered the ÒCredit Default Swap CrisisÓ.
The staggering amounts of foreign money coming into the United State as a result of the towering trade deficits created the housing and the stock market bubbles. These drove the sales of vast quantities of credit default swaps. Vast quantities of these swaps were sold and this greatly exacerbated the credit default swap crisis.
Under maxim-based-management, people follow maxims instead of following the CEO. Perhaps more importantly, instead of thinking ÒWhat would the CEO want me to do?Ó people think instead in terms of ÒWhat would the maxim dictate that I do?Ó
Under CEO-based-management, everybody knows the CEOÕs intent in general terms; they use common sense to figure out how to do their part to meet the CEOÕs goals, which could be as broad as merely figuring out how to make the most money possible. Under CEO-based-management, people simply do their best.
Under maxim-based-management, however, everybody knows the maxims and follows them at any cost, regardless of what the CEO wants to do. Corporations operating within this management paradigm, there is no place for common sense and for that matter, no place for the CEO either.
Hearing stories from the age of CEO based management shows us what we have lost.
During World War I, Great BritainÕs W.O. Bentley, Ettore Bugatti from France, and Henry Ford from the United States, among others, were invited to a meeting in Washington DC. Curtis was going to be ready to ship a plane in six weeks but they still hadnÕt found an engine for it. The United States military brought the auto industry CEOs in, to see if they could get any of them to supply the new engine.
Henry Ford brought along a young metallurgist who had just graduated from MIT: His name was Childe Harold Wills who asked if he might present last.
Automaker after automaker estimated that it would take years to develop the new engine. One general quipped that Ôthe war would be over before they had an engineÕ. Then, Wills took the podium and said simply, ÒThe Ford Motor Company will be in full production in six weeksÓ and opened the presentation to questions.
When someone pointed out that he couldnÕt even get all the bugs worked out of a block casting by that time, Wills told them that he was going to weld the block instead. This had never been done before. He also said that they were going to ship the engines straight to the docks where they would be matched up with the planes, assembled, and shipped to France for the war.
Ford got the contract. Wills and his design team worked in shifts, 24 hours a day, seven days a week. At the end of six weeks, Ford was shipping boxcars full of the new engines. Wills went on to start Wills Sainte Claire, which made automobiles from 1921 to 1927.
This type of ingenuity also recurred World War II. One day, for example, a general drew a picture of the plane that he knew was needed on a napkin and ninety days later, Lockheed delivered a prototype.
This is what we lost, bit-by-bit, when we went from CEO-based-management to that of the maxim.
In the major corporations at least, management today is based on the business school maxims, ÒYou can never tell what the consumer will want, they are completely unpredictableÓ and ÒWe are not going to turn the whole corporation upside down to do what some engineer wants to doÓ.
Another business school idea holds the notion of Òpeople who donÕt fit inÓ, is, effectively, a call for ideological cleansing. People who donÕt believe in the maxims, do risk being fired and or ostracized.
This is unproductive, and in effect, creates a ÒBig BrotherÓ who is watching. People in these settings feel forced to show that they Òfit inÓ by identifying and thwarting those who appear not to.
The consequence of being fired and ostracized is a lost career and the loss of all of the money and effort that was spent on the college education that made the career possible. This puts the white-collar workerÕs self-interest of not being fired and ostracized over that of his CEO.
The first maxim delegitimizes innovators. Whenever an innovator proposes innovation, there is a large chance that someone will say, ÒYou can never tell what the consumer will want; they are completely unpredictableÓ.
This statement makes the innovator appear delusional, a gambler; believing that he has a system for beating the casino: That through sheer willpower, they can make the dice roll seven or eleven. This is a double negative; after all, who wants to put a delusional person or a gambler in charge of investorÕs money, would you?
It also makes the innovator look like an ignoramus who hasnÕt heard that, ÒYou can never tell what the consumer will want; they are completely unpredictableÓ.
Innovators are concerned with being perceived as delusional gamblers, ignoramuses, and are inadvertently encouraged to keep their ideas to themselves. Anyone that able to suspend their fear long enough to try to present a new idea, will likely be stopped by a crowd of people who perceive them as all of the above. This will usually destroy the innovatorÕs career and silence many other would-be innovators.
Even if the innovator is able to find work elsewhere, there is very little chance that he or she will be brave enough to do it all over again, except in the context of their own entrepreneurial venture.
This is one of the leading reasons why innovators are driven to start their own companies: Their careers are destroyed. They hence must choose between going to another corporation where they would be subject to the same risks, or taking the safer route of starting their own entrepreneurial venture.
People whose careers have been destroyed for innovation know that they have no parachute. They have to make the entrepreneurial venture succeed or end up underemployed.
The second maxim, ÒWe are not going to turn the whole corporation upside down to do what some engineer wants to doÓ, enforces the first maxim, substantially forcing grass-roots managers, and their peers, to block commercialization of any engineer-visualized innovation opportunities, or to allow engineers to have any input into the process of visualizing innovative opportunities.
The third maxim dictates that grass roots managers neither retain, nor hire, nor promote, nor support, nor listen to Òpeople who donÕt fit inÓ. ÒPeople who donÕt fit inÓ is a euphemism for Òaccomplishment-motivated peopleÓ, Òindividual contributorsÓ or Òpeople who take individual initiativesÓ.
Anyone who supports Òa person who doesnÕt fit inÓ risks being labeled himself as Òa person who doesnÕt fit inÓ. This 1950s mindset could cause them to be passed over for a promotion or simply fired. This could, in turn, end their career because major corporations seldom hire Òa person who doesnÕt fit inÓ. This thus teaches grass roots managers and professionals to Òknow their placeÓ.
These maxims collectively signal grass roots managers and professionals to see innovators as the corporationÕs enemy and wage war on them; shutting down high-profit innovation as well as causing loss of corporate competitiveness, stagnation and decline. Massive investor losses follow, along with lost jobs, and needlessly large trade deficits.
The maxims also explain why business schools donÕt put much effort in developing skills in visualizing high-profit innovation opportunities. The maxims have, substantially, outlawed high-profit innovation.
Phrasing the maxim, ÒWe are not going to turn the whole company upside down to do what some engineer wants to do.Ó The term of Òwants to doÓ trivializes engineers in yet another way, portraying them as immature, as though they were small children always wanting their way.
These statements tend to foster hatred of creative people, especially engineers.
Hate is self-rewarding behavior. This is true, because the human brain rewards itself whenever we think hateful thoughts or engage in acts of the same; our brains secrete shots of serotonin that cause pleasure and a sense of accomplishment. This is why violent video games are so addictive. Every act of virtual violence causes the brain to release serotonin and dopamine, furnishing a sense of pleasure and accomplishment.
Real accomplishment is self-rewarding too. Engineers get a sense of pleasure and accomplishment when they solve a technical problem. This includes finding opportunities to create high-profit innovation. Entrepreneurs tend to be motivated by genuine accomplishment: They strongly encourage this behavior. Grass roots managers working in mature corporations, however, all too often tend to be motivated by hatred of innovators to the point of discouraging it.
This creates the situation where, despite limited resources, unfunded startups can miraculously find the high-profit innovation opportunities to propel explosive growth, but major corporations, with their enormous resources and staggering R&D budgets fail to accomplish the same end.
The reason for the huge gap in performance when it comes to finding high-profit innovation opportunities that exists between the entrepreneurial corporation and the mature corporation is that the entrepreneurial corporation encourages self-rewarding accomplishment behavior while the major corporation encourages self-rewarding hate behavior, whereby hate is directed toward the accomplishment of others.
The entrepreneurial corporations tends to be motivated by love of accomplishment, the mature corporation tends to be motivated by itsÕ discouragement. This explains why entrepreneurial corporations accomplish so much more, relative to their resources, than do majors.
The business school philosophy has adverse consequences. Their thinking has severely reduced United States competitiveness and placed this countryÕs major corporations, as a whole, into stagnation and decline. It has further severely damaged the United States economy while having caused a substantial decline in science and engineering school attendance. All of this has happened at a time when Chinese engineering attendance is growing exponentially.
Our 1950s thinking has individual initiatives so frowned upon, that committees choose most innovation vectors. This way no one person stands out and nobody has to take the risk of being seen as taking an individual initiative.
Likewise, managers donÕt want to link engineering project definitions to financial outcome because, if they do, someone might say; ÒYou can never tell what the consumer will want, they are completely unpredictableÓ; who could cause this person to look foolish.
This reduces Engineering projects to the lowest common denominator. They become nothing more than busy work designed solely to exhaust the engineering budget and waste huge amounts of money.
Entrepreneurs do not have the luxury of believing that; ÒYou can never tell what the consumer will want, they are completely unpredictableÓ. They have to predict what innovation vector will lead to high growth and high margins. Entrepreneurship is based on the idea of self-funded growth. Self-funded growth is impossible without high margins. Mature corporations can survive on much lower margins because their facilities are already built.
If someone is open-minded, it is intuitively obvious that the statement; ÒYou can never tell what the consumer will want, they are completely unpredictableÓ is false.
Corporate cultures capable of believing that they can tell what the consumer will want have strong track records of back-to-back successes, whereas corporate cultures that believe the business school maxim hold strong adverse track records of back-to-back failure.
Engineers and creative people generally, almost always believe that this statement is false. But most venture capitalists are business school graduates and they tend to believe that the statement is true.
During the dot.com bubble an estimated 2,700 venture-capital-funded dot.com startups failed. Business school graduates, who believed that this statement was true, started most of these.
People who believe that this statement is false have an incentive to search for and find a rare explosive growth opportunity. People who believe that success is just a matter of luck are likely to try a patently stupid idea like selling pet food on line.
Despite the dismal track records of those who believed this statement, engineers who did not believe it, started numerous unfunded start-ups such as eBay, Google and Yahoo. Once these companies succeeded, they got venture capital, but they didnÕt start out with venture capital funding.
Many corporations exhibit back-to-back success, Apple (under Steve Jobs), Microsoft, Google, Nintendo, General Electric, BMW, Toyota, Porsche, Nissan, Ferrari, Honda; just to name a few.
But, many times success is not the product of one good idea, but the product of thousands of good ideas that succeed back-to-back with few failures in between: Consider the iPhone or Wal-Mart.
The evidence truly supports the notion that the statement ÒYou can never tell what the consumer will want; they are completely unpredictable.Ó is false and that believing in itsÕ falsity contributes greatly to financial success.
Back in 1993, the author was trying to raise venture capital for a new company that that had elements of eBay and Google, but with a different revenue model. The author showed this to a business school professor. The good teacher noted that the business plan explained why the company ought to succeed, but that he never encountered this in the MBA written business plans that he reviewed.
Whether a corporate culture believes this statement or not changes outcome profoundly. Many CEOs talk about Òentrepreneurial spiritÓ. They say, ÒIf only we could re-capture that entrepreneurial spiritÓ.
Corporate spirit comes from believing the statement, ÒYou can never tell what the consumer will want; they are completely unpredictableÓ. Entrepreneurial spirit comes from adamantly disbelieving this statement. ItÕs that simple.
In the typical major corporation, the grass roots managers believe the statement; ÒYou can never tell what the consumer will want; they are completely unpredictableÓ, but the CEO most likely does not.
If you believe this statement, there is little reason to innovate. This statement creates the illusion that attempting to create high-profit innovation is analogous to gambling; the outcome is completely outside of your control. If you strongly disbelieve in this statement, this disbelief creates the accurate perception that the outcome is completely within your control and that high-profit innovation is a choice.
This often creates the situation where the CEO believes that the corporation can create high-profit innovation, but the grass roots managers donÕt believe they can.
This, in turn, creates the situation where the CEO wants his grass roots managers to create high-profit innovation, but they do not even want to try.
Because of their different beliefs, the CEO would see the choice as being one of doing or not doing high profit innovation, but his grass roots managers would see it as a choice of Ôtry or donÕt tryÕ. The first choice is motivating while the second is debilitating.
When the grass roots managers donÕt even want to try to create high-profit innovation, the CEO is left with only one option, they can drop everything else and manage the innovation personally.
When circumstances donÕt allow the CEO to take off for a couple of years to manage an innovation project and the grass roots managers donÕt want to even try to create high-profit innovation, the CEO has no options left: This is quite often the case.
If the grass roots managers collectively believe the statement: ÒYou can never tell what the consumer will want; they are completely unpredictableÓ, then none of these people would have any motive to engage in high-profit innovation.
Before you can create high-profit innovation, you have to visualize that innovation as a whole. In other words, you have to be able to see the outcome before you can take the steps to reach that it. But, you can only see this outcome if you do not believe the statement, ÒYou can never tell what the consumer will want; they are completely unpredictableÓ.
Visualization comes from the subconscious: That thing that you are visualizing comes to you all at once; the outcome just pops into your head.
For example, Albert Einstein said that the idea of relativity just popped into his head fully formed. Einstein knew the background physics and mathematics, so his subconscious worked out the idea for him. Since calculus was a prerequisite for working out this idea, Albert EinsteinÕs subconscious had to be able to do calculus otherwise he would not have been able to make the discoveries that he made.
While many people learn to do calculus in their conscious mind, few develop the talent to do calculus in their subconscious mind: This is what makes Albert EinsteinÕs talent so rare.
Now that Einstein has written down his calculus in a book, people who merely know how to work out calculus in their conscious mind can understand what he has written, thus making the knowledge accessible to many others.
When the subconscious mind creates one of these visions, it is like the process that our brain uses to avoid an automobile accident. The subconscious takes over and avoids the accident.
To be able to visualize high-profit innovation, you would have to understand both the economic processes that lead to high-profits and the technical processes that lead to the innovation. So, before you could develop a hit song, it would be good to know the economic processes that make particular songs a hit and you would further have to understand music.
Over time, a group of people can come to understand the economic processes that lead to high-profit innovation, then this group would be able to recognize when one of their own is on to something. The person coming up with the innovation would also have to deeply understand the technical creative processes that make it possible. This could be music, cooking, science, writing, software development, motion picture production, or any number of other technical creative processes. Most of the time, however, the technical creative process is engineering. For simplicityÕs sake, throughout this document, we will use the single word ÒengineeringÓ to refer to any and all technical creative processes.
Coca-Cola Corporation owes its initial success to a great recipe well timed. Formulation of this recipe was the technical creative processes that brought about this high-profit innovation.
The transistor is the most successful invention of all time. It is based on quantum mechanics: The concept could not have popped into someoneÕs mind until they had an adequate background in theoretical physics ... only a nuclear physicist could have come up with the concept.
Almost everyone at AT&T, the birthplace of the transistorÕs invention, knew that the company needed a cheap and reliable alternative to the vacuum tube. The economic drive was in-house and AT&T was the customer.
In 1998 television host Charlie Rose asked Bill Gates who he feared, who was his competition. Bill Gates replied, ÒTwo guys in a garageÓ. That year, Òtwo guys in a garageÓ founded Google. A decade later, when Charlie Rose asked the same question, Bill Gates replied, ÒGoogleÓ.
The reason why Bill Gates made this prediction was simply that ÒTwo guys in a garageÓ are motivated to find high-profit innovation, while corporate grass roots managers are not. Being motivated versus not being motivated gives an overwhelming competitive advantage to Òtwo guys in a garageÓ.
Of course, Òtwo guys in a garageÓ have enormous disadvantages of first not having very much money and second having to face enormous barriers to the raising of start-up funding.
Once someone has visualized an innovation opportunity however, it is fairly straightforward to determine whether that opportunity is one that is highly profitable. Even if it isnÕt one right away, with modification, it may well become such. The problem here is not so much the difficulty in determining whether any particular opportunity is of high-profit, but the widespread belief that; ÒYou can never tell what the consumer will want; they are completely unpredictableÓ.
Even it you strongly disbelieved the statement; ÒYou can never tell what the consumer will want; they are completely unpredictableÓ, you would still benefit from some formal education in how to scientifically screen ideas in search of high-profit opportunities or for modifying ideas to make them so.
But, business schools teach that; ÒYou can never tell what the consumer will want; they are completely unpredictableÓ. Since adamant disbelief of this statement is a prerequisite for visualizing high-profit innovation opportunities, the business schools and the business authorship community has not put much effort into writing books on or teaching courses in visualizing these necessary opportunities, screening ideas for their potential, or modifying ideas to increase it.
We do indeed have a business world divided. The entrepreneurs adamantly believe that this statement is false while most of the professional managers at major corporations believe that it is true.
The entrepreneurs are good at generating high-profit innovation, explosive growth vehicles, high-margin, high-growth businesses, or whatever else you want to call them, back-to-back thus leading to prolonged explosive growth.
The professional managers have a great track record, on the other hand, of being good at generating stagnation and decline. The business schools ought to call their management system ÔCommand and StagnateÕ rather than ÒCommand and ControlÓ. Well, they certainly arenÕt controlling financial performance in a positive sense, are they? It is possible that they mean controlling financial performance in a negative sense, where control means ÒlimitÓ. Then, ÒCommand and ControlÓ would mean ÔCommand and Limit Financial PerformanceÕ: Perhaps this is what they mean.
The maxim; ÒWeÕre not going to turn the whole company upside down to do what some engineer wants to doÓ also has a profound negative effect on a corporationÕs ability to engage in high-profit innovation. The problem is that, even if they believed that the statement; ÒYou can never tell what the consumer will want; they are completely unpredictableÓ were absolutely false and even if they were well trained in how to find, modify, and confirm high-profit innovation opportunities; their lack of technical expertise would be a major barrier to visualizing high-profit innovation opportunities.
Talent is the other factor, a rare commodity in the best of times. That is why we call it talent, because it occurs where you least expect it.
The most talented inventor to date is Thomas Edison. He had five months of formal education. But he nonetheless created the electric power industry, that of power conversion equipment, electric lighting, home appliances, motion pictures, as well as that for sound recording. In so doing, he created a vast global network of major corporations. Edison literally mass produced whole industries and major corporations alike.
Dame Evelyn Glennie is one of the worlds the top classical musicians who can play 60 different instruments, mainly in the percussion area. She headlines with symphony orchestras worldwide, giving hundreds of concerts annually, but this is not something that you would expect from a profoundly deaf farm girl.
The business schoolÕs restrictive policies, expressed in the maxim ÒWeÕre not going to turn the whole company upside down to do what some engineer wants to doÓ exclude engineers and unexpected talents from the process where innovation vectors are selected.
Clearly, people trained in a creative technical process are more likely to have the rare talent required to visualize high-profit innovation opportunities or to be able to develop that talent. So, it is critically important that these people be allowed to contribute. But, given that the janitor and the assembly line worker probably have more formal education than Thomas Edison, there is no reason to believe that they couldnÕt make a meaningful contribution. After all, a fifteen-year-old farm kid, Philo Farnsworth invented the television.
During the early 1950s, W. Edwards Deming and Joseph M. Juran independently pioneered management practices that included the assembly line worker. This was not well received in the United States, but was very well received in Japan. Many Japanese corporations, most notably Toyota, adapted Deming and/or Juran management philosophies. Toyota credits their success to Deming management.
The business school maxim, ÒWe are not going to turn the whole corporation upside down to do what some engineer wants to doÓ instructs managers to exclude engineers from participating in the selection of innovation vectors. This has had a profound negative impact on corporate financial performance simply because the managers seldom have enough technical expertise to visualize high-profit innovation, something which an engineer could more often do.
Of course, it is critically important that everyone involved reject the business school maxim, ÒYou can never tell what the consumer will want; they are completely unpredictableÓ and be properly trained in the economic principles of and techniques for high-profit innovation.
Companies where engineers are included in the process of visualizing high-profit innovation opportunities tend to do better. This is why Toyota, Nissan, BMW, Porsche, Honda, and Ferrari have such extraordinary financial success.
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Copyright 2008, David Sieverding
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