The Knowledge Economy: Making the Transition

by Chris Wendel, Regional Director, MI-SBTDC

We’ve heard much talk lately about the “knowledge economy” and its role in our national, state, and local situations. From a broad perspective the knowledge economy refers to the transition from an activity centered on the production of manufactured goods to value placed on human capital including cutting edge ideas, technology and information. While some may argue the exact definition of the term knowledge economy, we all know that many of the traditional rules of economics no longer apply to what’s happened to our national economy in the past year.

Michigan is an example of how this transition can be painful, when a large percentage of economic activity traditionally depended on high paying employment assembling hard goods (can you say Big Three?) rather than employment requiring a high tech education and skill set.

Today most of the world’s thriving urban centers have high concentrations of young people who are well educated, earn high salaries, and are will versed in this knowledge economy tenants. The internet is the centerpiece in this era of quick transition, spreading new information to people in different parts of the globe, accelerating the opportunities for technology advancement, and creating tremendous opportunities for those who are forging ground breaking ideas.

How does this translate to the economy of Northern Michigan? First, the world is now our marketplace with the internet making us closer than ever to large scale commerce both domestically and world wide.  One no longer has to necessarily live in an urban center to regularly participate, work, and interact with other large scale businesses. Instant media coverage makes all of us less isolated from what is cutting edge while business and social networking creates an environment of small market niche opportunities that can be exploited over an ever expanding geographic landscape.

Our area’s highly valued quality of life is the backbone that already attracts a high caliber work force that lives here by choice and does business many times from an up north “virtual office”. A sector of the young population (age 25-35) mentioned earlier is increasingly moving to Northwest Michigan, in search of a certain lifestyle, while being well equipped for navigating the knowledge economy, and possessing a strong vigor for technology, arts, and the environment.

In many ways our region has already made a somewhat successful transition into a diversified economy that combines both the soft technology of the knowledge economy with a still necessary manufacturing base. Challenges remain in attracting, training, and retaining a talented work force and improving our infrastructure in areas of accessible internet in isolated rural areas. While some are still trying to understand what the knowledge economy is all about, it’s obvious that its impact has already arrived.

Doing Well, Doing Good

By Chris Wendel

Many of the business lessons we learn come from the voices of our mentors. I catch myself sometimes uttering sage words of advice that came from my father including the phrase “You have to do well before you can do good.”

With that engrained in my mind over the years, I have been a firm believer in making a company financially strong before giving much back in charitable or socially conscience contributions. As cut and dried as that seems, I’ve seen plenty of exceptions lately that have altered my point of view.

So as a business owner, when is the right time and the right way to give back? The most effective company programs for community involvement have some element of employee initiative. It can be something simple like employees coaching their kids’ teams and evolve into the company sponsoring the kids’ team, and beyond.

If you or your company’s employees have a local charitable group or cause that they care for, then the business can show an effort (monetarily or otherwise) in that direction. There are plenty of local examples of imaginative alliances made between business and non-profit groups. Grand Traverse Pies donate a portion of pie sales to breast cancer research, area businesses decorate trees for the annual Festival of Trees, Traverse City State Bank sponsors a 4-H kid’s steer in the Northwestern Michigan Fair.

The idea is to donate, endorse and be directly involved with a charity at the same time. It’s not just saying that your company gave money to a charity or social cause; it’s having a true company and employee stake that demontrates true dedication to that charity.

One local company founded their company in the premise of being socially responsible before all else. Higher Grounds Trading Company built its company with the idea of selling fair trade coffee from villages in Central and South America, and Africa. Owners Chris and Jody Treter wove the mission of social good into their original company business plan and have stuck to it ever since.

Aligning Personal & Business Goals

Guest Columnist, Peter Wendel

Once again we enter a new year. But this one is different! We have a new president elect, the economy is in shambles and every business is facing new, serious challenges. What used to work won’t work now.

It’s often normal to use this time of the year to step back, evaluate where we are and set some new goals for the New Year. In our personal lives it’s called ‘making new years resolutions.’ In business, it’s an informal kind of strategic planning.

But often, we do a kind of problem solving; focusing on trying to do what we’ve been doing, but better – a kind of ‘fix mode.’

The trouble is that because the world has changed, fixing often isn’t good enough. We need to shift from dealing with today’s problems to focusing on building a different future. Instead of being problem driven, it’s time to be vision led.

Let’s take some time to explore ideas for business owners to ponder as you prepare for the new, different 2009. Remember, you are being challenged to think differently – to let go of old ideas and old approaches.

Here are some ideas for you to consider as you look ahead:

The ultimate measure of success of any business is how well it helps you and your associates achieve your personal goals. Your sales, innovation, customer service, production, etc. results are all finally measured by the answer to key questions such as; “Were we profitable?” and “Did we move closer to our personal goals?”

This raises the key question for you, “What are my personal goals?” It’s so easy to get stuck in a rut – to keep doing the same thing you’ve been doing. You need to get out of that rut and focus on what you want to create. The change of focus energizes your brain and gets you thinking differently. The key is to have a destination to make informed decisions. Remember the old saying, “If you don’t know where you are going, no road will take you there!”

Start by thinking about your personal goals five to ten years from now. Where do you want to be in your life? What do you want your business role to be? Will you still be working? What is your exit strategy; an internal sale to your associates or an external sale to an outside party? How far along do you want be in the transfer of leadership and ownership?

Now choose what you want to achieve in the next year to reach your five to ten year goals. What do you want to happen in your business to help you achieve your personal goals? Where will you focus your energies and your resources?

What’s going on around you? What has changed in your markets? How are your customer’s expectations changing? What new technological changes will, or might, impact your business? Are new competitors with new solutions and new products entering your markets?

What about your staff? Do your potential future leaders have the needed skills and a ‘fire in their belly?’ Are key people moving toward retirement that you need to replace? Are you in tune with the interests and expectations of the Gen X people who have joined your business?

Now make some plans. You can’t do everything. Decide where you will focus your resources. What should you stop doing, continue doing and what should you start doing that you aren’t doing now to move toward where you want to be next year at this time?

Having a plan doesn’t mean that you must rigidly follow it. The process of thinking about your future pulls you up from the ‘tyranny of the present,’ and moves you from being problem driven to becoming vision led. Thinking about what you want to achieve helps you prepare for unexpected events, capitalize on opportunities and deal with setbacks.

One last observation: I recommend that you don’t do this in a vacuum. Involve others. On the personal side, have conversations with your spouse, your family and others close to you. On the business side, involve your key associates. Explore your aspirations; explain your intentions and the reasoning behind them. Build alignment and involve them in planning the execution. Then check in regularly to be sure that you are all working together. (For ideas on the kinds and frequency of meetings, go to the book Death by Meeting by Patrick Lencioni.)

It’s not enough to keep doing what you’ve been doing. Your challenge is to clarify the future you want to create and think differently, boldly, about your next steps to get you there.

Peter Wendel is the founder of the Peter Wendel Group, an organization dedicated to helping build high performing companies through strategic planning, team building, and leadership development.

New Businesses Snowball from Unlikely Places

Getting Things Rolling!

By Chris Wendel, Regional Director – Small Business & Technology Development Center

Last week I represented our organization at a local lender’s forum. These get togethers are typically organized by a local chamber of commerce or economic development group to give local businesses people, bankers and other financial related organizations a feel for the borrowing climate and available financial resources. With the extreme changes in our state and national economy it was interesting to see how things have shaken out on the local level.

I was surprised by how some of financial institutions viewed the plight of a start up business. The word entrepreneur was flying around the room, yet the prevailing thoughts centered around the traditional bricks and mortar start up, where large sums of money are initially needed for renting a building location and financing the owner’s wages while the business gets rolling.

This is counter to many of the start ups our office is seeing around the region. The new model includes many Internet based businesses that start on a small scale as a side enterprise. The owner is many times looking for auxiliary income and if the idea if well accepted, it is expanded over time, and then the owner considers the plunge to full time self-employment.

Examples include the stay at home mom who successfully runs an online retail operation selling not just to the local community but throughout the country and world, the self published author who writes when time permits around their regular job, and the hobby gardener who sells their produce to a local roadside farm market.

These small niche businesses collectively provide viable economic impact to the area and disposable income that is spent with other local businesses. These enterprises require small amounts of start up funding, are truly resourceful, and do I dare say…entrepreneurial.